Jul 17 2012
Biomet, Inc. announced today preliminary financial results for its
fourth quarter and fiscal year ended May 31, 2012. The final results for
the three and twelve months ended May 31, 2012 will be made available to
the public with the filing of Biomet's Form 10-K for fiscal year 2012
and will include the finalization of a non-cash goodwill and intangible
asset impairment charge as further described below and certain income
tax accounts.
Fourth Quarter Preliminary Financial Results
Net sales totaled $739.5 million for the fourth quarter of fiscal year
2012, an increase of 3% compared to net sales reported during the fourth
quarter of fiscal year 2011 of $715.2 million. Excluding the effect of
foreign currency, net sales increased 5% during the fourth quarter. U.S.
net sales increased 7% to $439.5 million during the fourth quarter of
fiscal 2012, while Europe net sales decreased 8% (2% at constant
currency) to $182.4 million and International (primarily Canada, South
America, Mexico and the Pacific Rim) net sales increased 12% (14%
constant currency) to $117.6 million. During the fourth quarter, there
were the same number of billing days on a consolidated basis, compared
to the fourth quarter of fiscal year 2011.
Special items (pre-tax) totaled $607.2 million for the fourth quarter of
fiscal year 2012, including a non-cash goodwill and intangible asset
impairment charge of $529.8 million that was primarily related to the
Company's spine and bone healing reporting unit and dental reporting
unit principally driven by a reduction in management's expectations of
long-term industry growth rates compared to prior estimates; $72.9
million of non-cash amortization expense related to the Merger; and $4.5
million of non-Merger related special items.
Reported operating loss was $378.0 million during the fourth quarter of
fiscal year 2012, compared to an operating loss of $847.3 million for
the fourth quarter of fiscal year 2011. Excluding special items in both
quarters, adjusted operating income was $229.2 million, or 31.0% of net
sales, an increase of 6% compared to adjusted operating income of $216.3
million, or 30.2% of net sales, for the same period in fiscal year 2011.
On a reported basis, a net loss of $388.1 million was recorded during
the fourth quarter of fiscal year 2012, compared to a net loss of $812.8
million during the fiscal fourth quarter of the prior year. Excluding
special items in both quarters, adjusted net income for the fourth
fiscal quarter totaled $105.6 million, compared to adjusted net income
of $24.6 million for the fourth quarter of fiscal year 2011.
Adjusted earnings before interest, taxes, depreciation and amortization
("EBITDA") during the fourth quarter of fiscal year 2012 was $277.7
million, or 37.6% of net sales, an increase of 6% compared to adjusted
EBITDA for the fiscal fourth quarter of 2011 of $260.9 million, or 36.5%
of net sales.
Interest expense was $116.4 million during the fiscal fourth quarter,
compared to $125.2 million during the same period in fiscal year 2011,
primarily as a result of lower average interest rates on our term loans.
Free cash flow (reported cash flow from operations of $86.0 million less
capital expenditures of $56.6 million) was $29.4 million during the
fiscal fourth quarter, reflecting $183.1 million of cash interest paid
in the quarter.
Full Year Preliminary Financial Results
Net sales for the year ended May 31, 2012, increased 4% to $2,838.1
million from $2,732.2 million for fiscal year 2011. Excluding the effect
of foreign currency, net sales increased 3% during fiscal year 2012.
U.S. net sales increased 3% to $1,713.3 million during fiscal year 2012,
while Europe net sales increased 1% (flat constant currency) to $702.7
million. International (primarily Canada, South America, Mexico and the
Pacific Rim) net sales increased 13% (9% constant currency) to $422.1
million. During fiscal year 2012, there were the same number of billing
days on a consolidated basis, compared to fiscal year 2011.
Special items (pre-tax) during fiscal year 2012 totaled $940.7 million,
including the previously mentioned $529.8 million non-cash goodwill and
intangible asset impairment charge, $325.6 million of non-cash
amortization and depreciation expense related to the Merger, and $85.3
million of non-Merger related special items that were primarily
associated with our operational improvement initiatives.
Reported operating loss was $93.4 million during fiscal year 2012
compared to an operating loss of $576.9 million during fiscal year 2011.
Excluding special items in both periods, adjusted operating income
totaled $847.3 million, or 29.9% of net sales, an increase of 1%
compared to $837.7 million, or 30.7% of net sales, during fiscal year
2011.
On a reported basis, a net loss of $457.8 million was recorded during
fiscal year 2012, compared to a net loss during fiscal year 2011 of
$849.8 million. Excluding special items in both periods, adjusted net
income totaled $252.3 million during fiscal year 2012, an increase of
23% compared to adjusted net income of $205.2 million during fiscal year
2011.
Adjusted EBITDA increased 2% during fiscal year 2012 to $1,031.1
million, or 36.3% of net sales, compared to $1,010.4 million, or 37.0%
of net sales, during fiscal year 2011.
Interest expense during fiscal year 2012 was $479.8 million, compared to
$498.9 million for fiscal year 2011, principally due to lower average
interest rates on our term loans.
Free cash flow (reported cash flow from operations less capital
expenditures) was $198.0 million for fiscal year 2012, compared to free
cash flow of $206.1 million for fiscal year 2011.
Reported gross debt as of May 31, 2012 was $5,827.8 million and cash and
cash equivalents, as defined in the Company's Credit Agreement dated
September 25, 2007, totaled $492.4 million, which resulted in net debt
of $5,335.4 million. From May 31, 2008, the first fiscal year-end after
the Merger, to May 31, 2012, net debt decreased by $837.8 million due to
an increase in cash and cash equivalents, as defined by our credit
agreement, of $364.8 million and a $473.0 million reduction of gross
debt. The gross debt reduction includes a decrease of $262.1 million as
a result of favorable foreign currency translation on the Company's
euro-denominated debt.
As of May 31, 2012, Biomet's senior secured leverage ratio was 2.70
times the last twelve months ("LTM") adjusted EBITDA, as defined by our
credit agreement, compared to 4.01 times at May 31, 2008. The total
leverage ratio was 5.17 times LTM adjusted EBITDA at May 31, 2012,
compared to 6.97 times as of May 31, 2008.