Zimmer Holdings, Inc. (NYSE and SIX: ZMH) today reported financial results for the quarter and year ended December 31, 2012. The Company reported fourth quarter net sales of $1.18 billion, an increase of 1.1% reported and 2.1% constant currency over the fourth quarter of 2011. Diluted earnings per share for the quarter were $0.88 reported and $1.51 adjusted, an increase of 11.0% adjusted over the prior year period. Full-year net sales were $4.47 billion, an increase of 0.4% reported and 2.3% constant currency over the prior year. Diluted earnings per share for the year were $4.29 reported and $5.30 adjusted, an increase of 10.4% adjusted over the prior year.
"Throughout 2012, Zimmer successfully executed our value creation agenda, including innovation and growth initiatives, global transformation programs and capital allocation strategies," said David Dvorak, Zimmer President and CEO. "For the fourth quarter and full year, Zimmer delivered on our financial commitments, generating double-digit growth in adjusted earnings per share and significant operating margin improvements. We also achieved key regulatory and commercialization milestones for a number of innovative products and technologies, both in our core franchises and in new, adjacent musculoskeletal markets. These clinically-differentiated offerings will drive accelerated top-line growth in 2013 and beyond."
Net earnings for the fourth quarter were $152.8 million on a reported basis and $263.5 million on an adjusted basis, an increase of 7.6% adjusted over the prior year period. Operating cash flow for the fourth quarter was $368.0 million. Net earnings for the full year 2012 were $755.0 million on a reported basis and $932.5 million on an adjusted basis, an increase of 3.0% adjusted over the prior year. Operating cash flow for the full year was $1,151.9 million.
During the quarter, the Company utilized $140 million of cash to acquire 2.1 million shares. Consequently, for the full year 2012, the Company utilized $485 million of cash to acquire 7.7 million shares. As previously announced, the Company has a share repurchase program that authorizes purchases of up to $1.5 billion of the Company's common stock through December 31, 2014. The Company also paid $94 million in cash dividends to stockholders during 2012.
The Company recorded a non-cash charge for goodwill impairment of $96 million net of tax or $0.55 per diluted share related to the Company's U.S. Spine reporting unit during the fourth quarter. The Company conducts annual impairment tests during the fourth quarter. A number of factors have resulted in a change in the outlook for the spine market in the U.S., including pressure from payers on utilization of certain types of procedures and on reimbursement rates and prices generally. The change in outlook for the market, together with ongoing Company-specific challenges related to the U.S. Spine reporting unit, contributed to the decrease in the implied fair value of the unit compared with prior year.