Zimmer Holdings, Inc. (Zimmer) has reported net sales of $4.12 billion for the full year of 2008, compared with the net sales of $3.89 billion in the previous year-end. It has also posted net earnings of $848.6 million, or $3.72 per diluted share, for the full year of 2008, compared with the net earnings of $773.2 million, or $3.26 per diluted share, in the previous year-end.
For the fourth quarter, the company announced net sales of $1.03 billion, down from the prior year period of 4% reported and down of 1% constant currency. Diluted earnings per share for the quarter were $0.75 reported, down of 33% and $1.00 adjusted, down of 15% from the prior year period. Full-year net sales were $4.12 billion, up of 6% reported and 3% constant currency. Diluted earnings per share for the year were $3.72 reported, up of 14% and $4.05 adjusted, unchanged from the prior year.
“Although we are not satisfied with our 2008 financial performance relative to the market opportunities, we have made good progress in addressing the issues that negatively impacted our results. In the fourth quarter, we continued to ramp up our surgeon training and education programs, further advanced activities on the product development front, and resolved a large number of our outstanding payments to consulting healthcare professionals and institutions,” said David Dvorak, Zimmer president and chief executive officer. “We are excited about the prospects for reestablishing positive momentum in our overall business, with the goal of restoring revenue growth as 2009 progresses.”
Net earnings for the fourth quarter were $167.5 million on a reported basis and $224.6 million on an adjusted basis, down of 18.6% adjusted from the prior year period. Operating cash flow for the fourth quarter was $207 million.
During the fourth quarter of 2008, the company acquired 1.2 million shares of its common stock for an aggregate purchase price of $48.1 million. For the full year 2008, the company purchased 10.7 million shares for a total of $737 million. At the end of the year, $1.13 billion of authorization remained under the company’s $1.25 billion repurchase program, which expires on December 31, 2009.
In the fourth quarter, the company increased its provision for known and anticipated claims relating to the previously announced voluntary suspension of marketing and distribution of the Durom Acetabular Component in the US from the previously announced $47.5 million to $69 million. The increase is based on an assessment of the number of claims received since the end of the third quarter of 2008. Adjusted 2008 figures in this release exclude the impact of this provision.
Outlook
The company projects full-year revenues for 2009 to increase between 1% and 3% on a constant currency basis, with revenues projected to be flat in the first half of the year and improving thereafter. Assuming foreign currency exchange rates remain near year-end 2008 levels, the company estimates that foreign currency translation will reduce revenue by about 4% for the full year 2009. Adjusted diluted earnings per share are expected to show negative growth in the first three quarters with positive growth in the fourth quarter. Full-year 2009 adjusted diluted earnings per share are expected to be in a range of $3.85 to $4.00.