- Net Sales of $1.06 billion for the second quarter increased by 3.7% reported over the prior year period (an increase of 3.3% constant currency)
- Diluted EPS for the second quarter were $0.82 reported, a decrease of 16.3% from the prior year period, and $1.09 adjusted, an increase of 9.0% over the prior year period
- $1.5 billion stock repurchase program approved by Board of Directors
- Full-year sales and adjusted EPS guidance reaffirmed
Zimmer Holdings, Inc. (NYSE: ZMH; SIX: ZMH) today reported financial results for the quarter ended June 30, 2010. The Company reported second quarter net sales of $1.06 billion, an increase of 3.7% reported and 3.3% constant currency over the second quarter of 2009. Diluted earnings per share for the quarter were $0.82 reported and $1.09 adjusted, an increase of 9.0% adjusted over the prior year period.
"Our second quarter performance was characterized by year-over-year constant currency sales growth in all geographic segments, strong earnings and cash flow, and the continued introduction of important new products and instruments," said David Dvorak, Zimmer President and CEO. "We anticipate accelerated growth through 2010 as these new offerings augment our portfolio of clinically-proven solutions."
Net earnings for the second quarter were $165.5 million on a reported basis and $221.2 million on an adjusted basis, an increase of 2.6% adjusted over the prior year period. Operating cash flow for the second quarter was $272.7 million, an increase of 39.8% over the second quarter of 2009. Net earnings for the first six months of 2010 were $370.9 million on a reported basis and $428.6 million on an adjusted basis, an increase of 0.7% adjusted over the prior year period.
In the second quarter, the Company recorded an additional $75 million provision for known and anticipated worldwide claims related to the previously announced voluntary suspension of marketing and distribution of the Durom® Acetabular Component in the U.S. Adjusted 2010 figures in this release exclude the impact of this provision.
During the quarter, the Company utilized $85.4 million of cash to acquire 1.4 million shares under its existing $1.25 billion repurchase program. At the end of the second quarter, $32.2 million of share repurchase authorization remained available under this program, which expires on December 31, 2010.
The Company's Board of Directors has approved an additional $1.5 billion stock repurchase program, which expires on December 31, 2013. Purchases may be made in the open market or in privately negotiated transactions from time to time in compliance with Securities and Exchange Commission regulations, depending on market conditions and other factors.
The Company also announced that it has entered into a definitive agreement to acquire Beijing Montagne Medical Device Co., Ltd., a leader in the rapidly growing Chinese orthopaedic implant market. Financial terms were not disclosed. Subject to regulatory approvals and certain other conditions, the acquisition is expected to close in late 2010 or early 2011.
Guidance
The Company reaffirmed its full-year sales and adjusted EPS guidance for 2010. Full-year revenues are expected to increase between 3% and 5% on a constant currency basis. Assuming foreign currency exchange rates remain near recent levels, the Company estimates that foreign currency translation will decrease revenues by approximately 0.5% for the full year 2010, resulting in expected revenue growth on a reported basis between 2.5% and 4.5%. Full-year 2010 adjusted diluted earnings per share are projected to be in the range of $4.15 to $4.35.