Zimmer Holdings, Inc. Reports Third Quarter 2008 Financial Results
 

  • Net Sales of $952 million represents an increase of 5% reported (3% constant currency)
  • Worldwide Reconstructive Sales increased 7% reported (4% constant currency)  
  • Worldwide Knee Sales increased 9% reported (7% constant currency)  
  • Diluted EPS were $0.95 reported and $0.97 adjusted, an increase of 7% adjusted over the prior year period 
  • Full-year Sales and EPS guidance revised

 

(WARSAW, IN)  October 23, 2008—Zimmer Holdings, Inc. (NYSE and SWX: ZMH) today reported financial results for the quarter ended September 30, 2008.  The Company reported third quarter net sales of $952 million, an increase of 5% reported and 3% constant currency over the third quarter of 2007.  Diluted earnings per share for the quarter were $0.95 reported and $0.97 adjusted, an increase of 7% over the prior year period, including a one-time gain of $0.08 per share on the sale of certain equity holdings.

“We are pleased with the considerable progress that we have made on our previously announced operating, infrastructure and compliance initiatives.  That progress includes implementation of our enhanced model for collaborating with surgeon consultants, who are so vital to solving clinical problems and improving patient outcomes,” said David Dvorak, Zimmer President and CEO.  “Although this transition is negatively impacting our operating results at this point, we are confident that our actions will position us to capture future growth opportunities represented by the markets we serve.”

Net earnings for the third quarter were $214.7 million on a reported basis and $218.5 million on an adjusted basis, an increase of 1.4% adjusted over the prior year period.  Operating cash flow for the third quarter was $308 million.  Net earnings for the first nine months of 2008 were $681.1 million on a reported basis and $699.7 million on an adjusted basis, an increase of 2.1% adjusted over the prior year period. 

During the third quarter of 2008, the Company acquired 720,000 shares for an aggregate purchase price of $48.6 million under its $1.25 billion repurchase program.  At the end of the quarter, $1.18 billion remained available to fund share repurchases under this authorization, which expires on December 31, 2009.

Comparisons of reported earnings for 2008 and 2007 are impacted by the following matters:

The Company and the U.S. Internal Revenue Service entered into an agreement resolving the uncertainty related to the deductibility of the $169.5 million civil settlement paid in the third quarter of 2007.  As a result, the Company recorded an estimated current tax benefit of $31 million in the third quarter of 2008, or approximately $0.13 per share.  Adjusted 2008 figures in this press release exclude the impact of this estimated current tax benefit.

During the quarter, the Company also recorded a provision of $47.5 million, or approximately $0.13 per share, for known and anticipated claims relating to the previously announced voluntary suspension of marketing and distribution of the Durom® Acetabular Component in the U.S.  Adjusted 2008 figures in this release exclude the impact of this provision.

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Contacts

Media

Brad Bishop
574-372-4291
bradley.bishop@zimmer.com

Investors

James Crines
574-372-4264
james.crines@zimmer.com

Paul Blair
574-371-8042
paul.blair@zimmer.com