Biomet Announces First Quarter of Fiscal Year 2013 Financial Results

  Biomet Announces First Quarter of Fiscal Year 2013 Financial Results

Business Wire

WARSAW, Ind. -- October 10, 2012

Biomet, Inc. announced today financial results for its first fiscal quarter
ended August 31, 2012.

  *Initial close of the Trauma Acquisition was announced June 15, 2012;
    substantially completed
  *Net sales increased 6% (10% constant currency) worldwide to approximately
    $707 million
  *Net sales, excluding the Trauma Acquisition, increased 1% (4% constant
    currency) worldwide
  *Large Joint Reconstructive sales decreased 1% (grew 2% constant currency)
    worldwide, with 1% growth in the U.S.
  *S.E.T. sales increased 56% (59% constant currency) worldwide and increased
    52% in the U.S.
  *Excluding the Trauma Acquisition, S.E.T. sales increased 8% (10% constant
    currency) and increased 11% in the U.S.
  *Initiated refinancing activities to reduce cost of overall debt capital
    structure

                       First Quarter Financial Results

Net sales increased 6% during the first quarter of fiscal year 2013 to $707.4
million compared to net sales of $664.6 million during the first quarter of
fiscal year 2012. Excluding the effect of foreign currency, net sales
increased 10% during the first quarter. U.S. net sales increased 9% to $452.2
million during the first quarter, while Europe net sales decreased 4%
(increased 9% constant currency) to $142.9 million and International
(primarily Canada, South America, Mexico and the Pacific Rim) net sales
increased 11% (14% constant currency) to $112.3 million.

Special items (pre-tax) for the fiscal first quarter totaled $122.7 million,
including $74.7 million of non-cash amortization expense related to the 2007
Merger and $48.0 million of special items, primarily associated with the
Trauma Acquisition and the Company’s stock-based compensation modification.

Reported operating income during the first quarter of fiscal year 2013 was
$69.0 million compared to operating income of $72.7 million during the first
quarter of fiscal year 2012. Excluding special items, adjusted operating
income totaled $191.7 million during the first quarter of fiscal year 2013,
compared to $182.3 million for the first quarter of fiscal year 2012.

Excluding special items, adjusted earnings before interest, taxes,
depreciation and amortization (“EBITDA”) was $237.8 million, or 33.6% of net
sales during the first quarter of fiscal year 2013, compared to $226.6
million, or 34.1% of net sales for the first quarter of fiscal year 2012.

Interest expense during the first quarter of fiscal year 2013 totaled $117.1
million compared to $125.4 million during the first quarter of the prior year,
primarily due to lower average interest rates on our term loans.

Reported cash flow from operations totaled $85.5 million for the first quarter
of fiscal year 2013, as compared to reported cash flow from operations of
$123.1 million for the first quarter of fiscal year 2012. Free cash flow
(operating cash flow of $85.5 million minus capital expenditures of $53.1
million) was $32.4 million, which reflected $62.5 million of cash interest
paid in the quarter compared to free cash flow (operating cash flow of $123.1
million minus capital expenditures of $39.2 million) of $83.9 million during
the first quarter of fiscal year 2012, which reflected $55.0 million of cash
interest paid.

During the first quarter of fiscal year 2013, the Company utilized cash on
hand of $280 million to fund the Trauma Acquisition. In addition, we initiated
various debt refinancing activities during the quarter, which are expected to
be completed during our fiscal second quarter of 2013. At August 31, 2012,
reported gross debt was approximately $6.282 billion, and cash and cash
equivalents, as defined in the Company’s Credit Agreement dated September 25,
2007, totaled $619.2 million, resulting in net debt of $5.663 billion,
compared to $5.335 billion at May 31, 2012.

Biomet’s senior secured leverage ratio as of August 31, 2012 was 2.55 times
the last twelve months (“LTM”) adjusted EBITDA, as defined by our credit
agreement, compared to 2.70 times at May 31, 2012 and 4.01 times at May 31,
2008. The total (net debt) leverage ratio was 5.43 times LTM adjusted EBITDA
at August 31, 2012, compared to 5.17 times at May 31, 2012 and 6.97 times at
May 31, 2008.

Biomet’s President and Chief Executive Officer Jeffrey R. Binder stated,
“Overall, I’m generally pleased with our results for the first quarter of
fiscal year 2013. The completion of the trauma acquisition bolsters our S.E.T.
product category to annualized sales in excess of $500 million in an
attractive segment of the orthopaedic market. The team has executed well on
the integration and our investment in building a great S.E.T. business is
paying off. We did experience some deceleration in growth for our hip and knee
business, but until others report their results we won’t know whether market
growth has slowed or our growth has come back to market.”

The following table provides first quarter net sales performance by product
category:

                                                            
                         First Quarter Net Sales Performance
                         (in millions, except percentages, unaudited)
                                                                             
                         Worldwide       Worldwide     Worldwide     United
                         Reported        Reported      CC            States
                         Quarter 1 -     Growth %      Growth %      Growth
                         FY 2013                                     %
                                                                             
Large Joint              $    393.0      (1)       %   2         %   1       %
Reconstructive
Knees                                    (1)       %   2         %   1       %
Hips                                     (1)       %   2         %   1       %
Bone Cement and                          (2)       %   4         %   6       %
Other
Sports,
Extremities,                  127.3      56        %   59        %   52      %
Trauma (S.E.T.)
Sports Medicine                          9         %   12        %   8       %
Extremities                              13        %   15        %   20      %
Trauma                                   192       %   199       %   190     %
Spine & Bone                  77.9       4         %   5         %   5       %
Healing
Spine                                    10        %   11        %   11      %
Bone Healing                             (10)      %   (9)       %   (10)    %
Dental                        57.0       (4)       %   1         %   4       %
Other                        52.2       1         %   4         %   1       %
Net Sales                $    707.4      6         %   10        %   9       %
                                                                             
                                                                             
Sports,
Extremities,
Trauma (S.E.T.)                          8         %   10        %   11      %
excluding Trauma
Acquisition
Trauma excluding
Trauma                                   (2)       %   -         %   -       %
Acquisition
                                                                             
Net Sales
excluding Trauma                         1         %   4         %   3       %
Acquisition
                                                                             
                                                                             

Large Joint Reconstructive sales decreased 1% (increased 2% constant currency)
worldwide to $393.0 million and increased 1% in the U.S. during the first
quarter of fiscal year 2013 compared to the first quarter of fiscal year 2012.
Knee sales decreased 1% (increased 2% constant currency) worldwide during the
first quarter and increased 1% in the U.S. Hip sales decreased 1% (increased
2% constant currency) worldwide during the first quarter and increased 1% in
the U.S.

S.E.T. sales increased 56% (59% constant currency) worldwide to $127.3 million
during the first quarter, and increased 52% in the U.S. Excluding the Trauma
Acquisition, S.E.T. sales increased 8% (10% constant currency) worldwide and
increased 11% in the U.S. Sports medicine sales increased 9% (12% constant
currency) worldwide during the quarter and increased 8% in the U.S. Extremity
sales grew 13% (15% constant currency) worldwide during the quarter, with a
growth rate of 20% in the U.S. Trauma sales increased 192% (199% constant
currency) worldwide during the quarter and increased 190% in the U.S. Trauma
sales, excluding the Trauma Acquisition, decreased 2% (flat at constant
currency) worldwide and were flat in the U.S.

Spine and Bone Healing (non-invasive trauma stimulation and bracing) sales
increased 4% (5% constant currency) worldwide to $77.9 million during the
first quarter and increased 5% in the U.S.

Dental sales decreased 4% (increased 1% constant currency) worldwide to $57.0
million and increased 4% in the U.S. during the first quarter.

Sales of Other products increased 1% (4% constant currency) worldwide to $52.2
million during the first quarter and increased 1% in the U.S.

About Biomet

Biomet, Inc. and its subsidiaries design, manufacture and market products used
primarily by musculoskeletal medical specialists in both surgical and
non-surgical therapy. Biomet’s product portfolio encompasses large joint
reconstructive products, including orthopedic joint replacement devices, and
bone cements and accessories; sports medicine, extremities and trauma
products, including internal and external orthopedic fixation devices; spine
and bone healing products, including spine hardware, spinal stimulation
devices, and orthobiologics, as well as electrical bone growth stimulators and
softgoods and bracing; dental reconstructive products; and other products,
including microfixation products and autologous therapies. Headquartered in
Warsaw, Indiana, Biomet and its subsidiaries currently distribute products in
approximately 90 countries.

Financial Schedule Presentation

The Company’s unaudited condensed consolidated financial statements as of and
for the three months ended August 31, 2012 and 2011 and other financial data
included in this press release have been prepared in a manner that complies,
in all material respects, with generally accepted accounting principles in the
United States (except with respect to certain non-GAAP financial measures
discussed below), and reflects purchase accounting adjustments related to the
Merger referenced below and the Trauma Acquisition.

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of
Section27A of the Securities Act of 1933 and Section21E of the Securities
Exchange Act of 1934, as amended. Those statements are often indicated by the
use of words such as “will,” “intend,” “anticipate,” “estimate,” “expect,”
“plan” and similar expressions. Forward-looking statements involve certain
risks and uncertainties. Actual results may differ materially from those
contemplated by the forward looking statements due to, among others, the
following factors: the success of the Company’s principal product lines; the
results of the ongoing investigation by the United States Department of
Justice; the ability to successfully implement new technologies; the Company’s
ability to sustain sales and earnings growth; the Company’s success in
achieving timely approval or clearance of its products with domestic and
foreign regulatory entities; the impact to the business as a result of
compliance with federal, state and foreign governmental regulations and with
the Deferred Prosecution Agreement and Corporate Integrity Agreement; the
impact to the business as a result of the economic downturn in both foreign
and domestic markets; the impact of federal health care reform; the impact of
anticipated changes in the musculoskeletal industry and the ability of the
Company to react to and capitalize on those changes; the ability of the
Company to successfully implement its desired organizational changes and
cost-saving initiatives; the ability of the Company to successfully integrate
the Trauma Acquisition; the impact to the business as a result of the
Company’s significant international operations, including, among others, with
respect to foreign currency fluctuations and the success of the Company’s
transition of certain manufacturing operations to China; the impact of the
Company’s managerial changes; the ability of the Company’s customers to
receive adequate levels of reimbursement from third-party payors; the
Company’s ability to maintain its existing intellectual property rights and
obtain future intellectual property rights; the impact to the business as a
result of cost containment efforts of group purchasing organizations; the
Company’s ability to retain existing independent sales agents for its
products; the impact of product liability litigation losses; and other factors
set forth in the Company’s filings with the SEC, including the Company’s most
recent annual report on Form 10-K and quarterly reports on Form 10-Q. Although
the Company believes that the assumptions on which the forward-looking
statements contained herein are based are reasonable, any of those assumptions
could prove to be inaccurate given the inherent uncertainties as to the
occurrence or non-occurrence of future events. There can be no assurance as to
the accuracy of forward-looking statements contained in this press release.
The inclusion of a forward-looking statement herein should not be regarded as
a representation by the Company that the Company’s objectives will be
achieved. The Company undertakes no obligation to update publicly or revise
any forward-looking statements, whether as a result of new information, future
events or otherwise. Accordingly, the reader is cautioned not to place undue
reliance on forward-looking statements which speak only as of the date on
which they were made.

*Non-GAAP Financial Measures:

Management uses non-GAAP financial measures, such as net sales excluding the
impact of foreign currency (constant currency), operating income as adjusted,
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) as
adjusted, net income as adjusted, gross profit as adjusted, selling, general
and administrative expense as adjusted, research and development expense as
adjusted, cash and cash equivalents (as defined by our credit agreement), net
debt, senior secured leverage ratio, total leverage ratio , free cash flow,
and unlevered free cash flow. Reconciliations of these non-GAAP financial
measures to the most directly comparable GAAP measures are included elsewhere
in the press release.

The term “adjusted” or “as adjusted,” a non-GAAP financial measure, refers to
financial performance measures that exclude certain income statement line
items, such as interest, taxes, depreciation or amortization, other (income)
expense, and/or exclude certain expenses as defined by our credit agreement,
such as restructuring charges, non-cash impairment charges, integration and
facilities opening costs or other business optimization expenses, new systems
design and implementation costs, certain start-up costs and costs related to
consolidation of facilities, certain non-cash charges, advisory fees paid to
the Company’s private equity owners, certain severance charges, purchase
accounting costs, stock-based compensation, litigation costs, and other
related charges.

These non-GAAP financial measures are not in accordance with, or an
alternative for, GAAP in the United States. Biomet management believes that
these non-GAAP financial measures provide useful information to investors;
however, this additional non-GAAP financial information is not meant to be
considered in isolation or as a substitute for financial information prepared
in accordance with GAAP.

Non-GAAP Reconciliation

A reconciliation of reported results to adjusted results is included in this
press release, which is also posted on Biomet’s website: www.biomet.com

Reclassifications

Certain prior period amounts have been reclassified to conform to the current
presentation. Such reclassifications were limited to net sales information by
product categories. The current presentation aligns with how the Company
presently reports sales and markets its products.

The Merger

Biomet, Inc. finalized the merger with LVB Acquisition Merger Sub, Inc., a
wholly-owned subsidiary of LVB Acquisition, Inc., which we refer to in this
press release as the “Merger”, on September25, 2007. LVB Acquisition, Inc. is
indirectly owned by investment partnerships directly or indirectly advised or
managed by The Blackstone Group, Goldman Sachs& Co., Kohlberg Kravis
Roberts& Co. and TPG Global.

Trauma Acquisition

On May 24, 2012, DePuy Orthopaedics, Inc. accepted the Company’s binding offer
to purchase certain assets representing substantially all of DePuy’s worldwide
trauma business (“Trauma Acquisition”), which involves researching,
developing, manufacturing, marketing, distributing and selling products to
treat certain bone fractures or deformities in the human body, including
certain intellectual property assets, and to assume certain liabilities, for
approximately $280.0 million in cash. On June 15, 2012, the Company announced
the initial closing of the transaction, acquiring DePuy’s trauma operations in
the U.S., the United Kingdom, Australia, New Zealand and Japan, as well as
DePuy’s trauma manufacturing operations in Le Locle, Switzerland. On July 13,
2012, the Company closed in Belgium, France, Germany, Luxembourg, The
Netherlands, Portugal, South Africa, Spain, Ireland, Italy and the Switzerland
non-manufacturing unit. In August, the Company closed on ten additional
countries including China. Subsequent closings for the remaining countries
will occur on a staggered basis and, in general, are expected to be completed
within six months of the initial closing. DePuy affiliates will serve as the
Company’s interim distributors in these countries until these operations are
fully transitioned to the Company. The Company acquired the DePuy worldwide
trauma business to strengthen its trauma business and to continue to build a
stronger presence in the global trauma market.

                                                           
                                                                             
Biomet, Inc.
Product Net Sales
Three Month Period Ended August 31, 2012 and 2011
(in millions, except percentages, unaudited)
                                                                             
                                                                   Constant
                        Three         Three
                        Months        Months       Reported        Currency*
                        Ended         Ended
                        August        August      Growth %        Growth %
                        31, 2012      31, 2011
Large Joint             $   393.0     $  397.0     (1)         %   2         %
Reconstructive
Sports,
Extremities,                127.3        81.8      56          %   59        %
Trauma (S.E.T.)
Spine & Bone                77.9         74.6      4           %   5         %
Healing
Dental                      57.0         59.3      (4)         %   1         %
Other                      52.2        51.9      1           %   4         %
Net Sales               $   707.4     $  664.6     6           %   10        %
                                                                             
Sports,
Extremities,
Trauma (S.E.T.)             88.5         81.8      8           %   10        %
excluding
Trauma
Acquisition
                                                                             
Net Sales,
excluding                   668.6        664.6     1           %   4         %
Trauma
Acquisition
                                                                             
                        Three                      Three
                        Months                     Months
                        Ended                      Ended
                        August                     August 31,
                        31, 2012                   2012
                        Net Sales     Currency     Net Sales
                        Growth                     Growth in
                        As            Impact*      Local
                        Reported                   Currencies*
Large Joint                 (1)   %      3     %   2           %
Reconstructive
Knees                       (1)   %      3     %   2           %
Hips                        (1)   %      3     %   2           %
Bone Cement and             (2)   %      6     %   4           %
Other
Sports,
Extremities,                56    %      3     %   59          %
Trauma (S.E.T.)
Sports Medicine             9     %      3     %   12          %
Extremities                 13    %      2     %   15          %
Trauma                      192   %      7     %   199         %
Spine & Bone                4     %      1     %   5           %
Healing
Spine                       10    %      1     %   11          %
Bone Healing                (10)  %      1     %   (9)         %
Dental                      (4)   %      5     %   1           %
Other                      1     %     3     %   4           %
Net Sales                  6     %     4     %   10          %
                                                                             
Sports,
Extremities,
Trauma (S.E.T.)             8     %      2     %   10          %
excluding
Trauma
Acquisition
Trauma
excluding                   (2)   %      2     %   -           %
Trauma
Acquisition
                                                                             
Net Sales
excluding                   1     %      3     %   4           %
Trauma
Acquisition
                                                                             
* See Non-GAAP Financial Measures Disclosure


                                                          
                                                                             
Biomet, Inc.
Geographic Net Sales
Three Month Period Ended August 31, 2012 and 2011
(in millions, except percentages, unaudited)
                                                                             
                                                                   Constant
                         Three        Three
                         Months       Months       Reported        Currency*
                         Ended        Ended
                         August       August       Growth %        Growth %
                         31, 2012     31, 2011
Geographic
Sales:
   United States         $  452.2     $  414.7     9           %   9         %
   Europe                   142.9        148.5     (4)         %   9         %
   International           112.3       101.4     11          %   14        %
   Net Sales             $  707.4     $  664.6     6           %   10        %
                                                                             
                                                                             
                         Three                     Three
                         Months                    Months
                         Ended                     Ended
                         August                    August 31,
                         31, 2012                  2012
                         Net                       Net Sales
                         Sales        Currency     Growth
                         Growth
                         As           Impact*      Local
                         Reported                  Currencies*
   United States            9     %      -     %   9           %
   Europe                   (4)   %      13    %   9           %
   International           11    %     3     %   14          %
   Total                   6     %     4     %   10          %
                                                                             
* See Non-GAAP Financial Measures Disclosure
                                                                             
                                                                             
                                                                             
Biomet, Inc.
Geographic Net Sales excluding Trauma Acquisition
Three Month Period Ended August 31, 2012 and 2011
(in millions, except percentages, unaudited)
                                                                             
                                                                   Constant
                         Three        Three
                         Months       Months       Reported        Currency*
                         Ended        Ended
                         August       August       Growth %        Growth %
                         31, 2012     31, 2011
Geographic Sales
excluding Trauma
Acquisition:
   United States         $  428.7     $  414.7     3           %   3         %
   Europe                   134.1        148.5     (10)        %   2         %
   International           105.8       101.4     4           %   8         %
   Net Sales             $  668.6     $  664.6     1           %   4         %
                                                                             
                                                                             
                         Three                     Three
                         Months                    Months
                         Ended                     Ended
                         August                    August 31,
                         31, 2012                  2012
                         Net                       Net Sales
                         Sales        Currency     Growth
                         Growth
                         As           Impact*      Local
                         Reported                  Currencies*
   United States            3     %      -     %   3           %
   Europe                   (10)  %      12    %   2           %
   International           4     %     4     %   8           %
   Total                   1     %     3     %   4           %
                                                                             
* See Non-GAAP Financial Measures Disclosure


                                                     
                                                            
Biomet, Inc.
As Reported Consolidated Statements of Operations
(in millions, except percentages, unaudited)
                                                            
                                                            
                                     Three Months Ended     Three Months Ended
                                     August 31, 2012        August 31, 2011
Net sales                            $    707.4             $    664.6
Cost of sales                            228.1                215.3    
Gross profit                              479.3                  449.3
Gross profit percentage                   67.8     %             67.6     %
                                                            
Selling, general and                      296.1                  261.6
administrative expense
Research and development                  35.8                   32.0
expense
Amortization                             78.4                 83.0     
Operating income                          69.0                   72.7
Interest expense                          117.1                  125.4
Other (income) expense                   37.5                 7.2      
Loss before income taxes                  (85.6    )             (59.9    )
                                                            
Benefit from income taxes                (54.1    )            (20.7    )
Tax rate                                  63.2     %             34.6     %
                                                            
Net loss                             $    (31.5    )        $    (39.2    )
Percentage of Net Sales                   -4.5     %             -5.9     %
                                                                          

                                                       
                                                              
Biomet, Inc.
Other Financial Information
Reconciliation of Operating Income, as reported to Operating Income, as
adjusted*
(in millions, unaudited)
                                                              
                                                              
                                       Three Months Ended     Three Months
                                                              Ended
                                       August 31, 2012        August 31, 2011
Operating income, as reported          $    69.0              $      72.7
Purchase accounting                         -                        4.6
depreciation
Purchase accounting                         74.7                     80.9
amortization
Stock-based compensation                    19.1                     4.7
expense
Litigation settlements and                  4.6                      1.0
reserves and other legal fees
Trauma acquisition costs                    6.9                      -
Operational restructuring and
consulting expenses related to
operational
initiatives (severance,
building impairments, abnormal
manufacturing
variances and other related                 6.8                      16.4
costs)
Inventory and property, plant
and equipment step-up
related to the trauma                       (0.1     )               -
acquisition
Excess and obsolete inventory
expense related to the trauma               8.1                      -
acquisition
Sponsor fee                                2.6                    2.0
Total items (pre-tax) excluded             122.7                  109.6
per our credit agreement
Operating income, as adjusted*         $    191.7            $      182.3
                                                              
* See Non-GAAP Financial Measures Disclosure
                                                              

                                                     
                                                                             
Biomet, Inc.
Other Financial Information
Reconciliation of Operating Income, as reported to EBITDA, as adjusted*
(in millions, except percentages, unaudited)
                                                                             
                                                                             
                                     Three Months           Three Months
                                     Ended                  Ended
                                     August 31, 2012        August 31, 2011  
Operating Income, as                 $      69.0            $      72.7
reported
Depreciation                                42.1                   46.8
Amortization                                78.4                   83.0
Special items adjustments
Stock-based compensation                    19.1                   4.7
expense
Litigation settlements and
reserves and other legal                    4.6                    1.0
fees
Trauma acquisition costs                    6.9                    -
Operational restructuring
and consulting expenses
related to operational
initiatives (severance,
building impairments,
abnormal manufacturing
variances and other related                 6.8                    16.4
costs)
Inventory and property,
plant and equipment step-up
related to the trauma                       0.2                    -
acquisition
Excess and obsolete
inventory expense related to                8.1                    -
the trauma acquisition
Sponsor fee                                2.6                   2.0
EBITDA, as adjusted*                 $      237.8           $      226.6
                                                                             
Net sales                            $      707.4           $      664.6
EBITDA percentage, as                       33.6      %            34.1      %
adjusted*
                                                                             
* See Non-GAAP Financial Measures Disclosure
                                                                             

                                                     
                                                            
Biomet, Inc.
Other Financial Information
Reconciliation of Net Loss, as reported to Net Income, as adjusted*
(in millions, unaudited)
                                                            
                                                            
                                     Three Months Ended     Three Months Ended
                                     August 31, 2012        August 31, 2011
Net loss, as reported                $    (31.5    )        $    (39.2    )
Purchase accounting                       -                      4.6
depreciation
Purchase accounting                       74.7                   80.9
amortization
Stock-based compensation                  19.1                   4.7
expense
Litigation settlements and
reserves and other legal                  4.6                    1.0
fees
Trauma acquisition costs                  6.9                    -
Operational restructuring
and consulting expenses
related to operational
initiatives (severance,
building impairments,
abnormal manufacturing
variances and other related               6.8                    16.4
costs)
Inventory and property,
plant and equipment step-up
related to the trauma                     (0.1     )             -
acquisition
Excess and obsolete
inventory expense related to              8.1                    -
the trauma acquisition
Sponsor fee                               2.6                    2.0
Tax effect on special and                (63.7    )            (41.8    )
purchase accounting items**
Net income, as adjusted*             $    27.5             $    28.6     
                                                            
* See Non-GAAP Financial Measures Disclosure
** The tax effect is calculated based upon the statutory rates for the
jurisdictions where the items were incurred


                                                     
                                                                             
Biomet, Inc.
Other Financial Information
Reconciliation of Gross Profit, as reported to Gross Profit, as adjusted*
(in millions, except percentages, unaudited)
                                                                             
                                                                             
                                     Three Months           Three Months
                                     Ended                  Ended
                                     August 31, 2012        August 31, 2011
Gross profit, as reported            $      479.3           $      449.3
Purchase accounting                         -                      4.6
depreciation
Stock-based compensation                    1.5                    0.3
expense
Litigation settlements and
reserves and other legal                    3.4                    -
fees
Trauma acquisition costs                    1.4                    -
Operational restructuring
and consulting expenses
related to operational
initiatives (severance,
building impairments,
abnormal manufacturing
variances and other related                 3.6                    10.2
costs)
Inventory and property,
plant and equipment step-up
related to the trauma                       (0.1)                  -
acquisition
Excess and obsolete
inventory expense related to               8.1                   -
the trauma acquisition
Gross profit, as adjusted*           $      497.2           $      464.4
                                                                             
Net sales                            $      707.4           $      664.6
Gross profit percentage, as                 67.8      %            67.6      %
reported
Gross profit percentage, as                 70.3      %            69.9      %
adjusted*
                                                                             
* See Non-GAAP Financial Measures Disclosure
                                                                             

                                                         
                                                                             
Biomet, Inc.
Other Financial Information
Reconciliation of Selling, General and Administrative Expense, as reported to
Selling, General and Administrative Expense, as adjusted*
(in millions, except percentages, unaudited)
                                                                             
                                                                             
                                         Three Months           Three Months
                                         Ended                  Ended
                                         August 31, 2012        August 31,
                                                                2011
Selling, general and
administrative expense, as               $     296.1            $    261.6
reported
Stock-based compensation                       (14.7)                (3.9)
expense
Litigation settlements and
reserves and other legal                       (1.2)                 (1.0)
fees
Trauma acquisition costs                       (5.5)                 -
Operational restructuring
and consulting expenses
related to operational
initiatives (severance,
building impairments, and                      (3.2)                 (6.1)
other related costs)
Sponsor fee                                   (2.6)                (2.0)
Selling, general and
administrative expense, as               $     268.9            $    248.6
adjusted*
                                                                             
Net sales                                $     707.4            $    664.6
SG&A as a percentage of net                    41.9       %          39.4    %
sales, as reported
SG&A as a percentage of net                    38.0       %          37.4    %
sales, as adjusted*
                                                                             
* See Non-GAAP Financial Measures Disclosure
                                                                             

                                                        

Biomet, Inc.
Other Financial Information
Reconciliation of Research and Development Expense, as reported to Research
and Development Expense, as adjusted*
(in millions, except percentages, unaudited)
                                                            
                                                            
                                     Three Months Ended     Three Months Ended
                                     August 31, 2012        August 31, 2011
Research and development expense,    $    35.8              $    32.0
as reported
Stock-based compensation expense          (2.9     )             (0.5     )
Operational restructuring and
consulting expenses related to
operational
initiatives (severance, and other        -                    (0.1     )
related costs)
Research and development expense,    $    32.9             $    31.4     
as adjusted*
                                                            
Net sales                            $    707.4             $    664.6
R&D as a percentage of net sales,         5.1      %             4.8      %
as reported
R&D as a percentage of net sales,         4.7      %             4.7      %
as adjusted*
                                                            
* See Non-GAAP Financial Measures Disclosure


                                                         
                                                                 
Biomet, Inc.
Condensed Consolidated Balance Sheets
(in millions, unaudited)

                                                                 
                                          (Preliminary)
                                          August 31, 2012        May 31, 2012
Assets
Cash and cash equivalents                 $    619.2             $   492.4
Accounts receivable, net                       487.7                 491.6
Short-term investments                         2.5                   2.5
Inventories                                    650.2                 543.2
Current deferred income                        53.4                  52.5
taxes
Prepaid expenses and other                     150.6                 129.1
Property, plant and                            668.2                 593.6
equipment, net
Intangible assets, net                         3,940.9               3,930.4
Goodwill                                       4,182.2               4,114.4
Other assets                                  96.3                 70.7
Total Assets                              $    10,851.2          $   10,420.4
                                                                 
Liabilities and
Shareholder's Equity
Current liabilities,                      $    484.8             $   474.9
excluding debt
Current portion of                             35.7                  35.6
long-term debt
Long-term debt, net of                         6,246.2               5,792.2
current portion
Deferred income taxes,                         1,192.4               1,257.8
long-term
Other long-term liabilities                    200.5                 177.8
Shareholder's equity                          2,691.6              2,682.1
Total Liabilities and                     $    10,851.2          $   10,420.4
Shareholder's Equity
                                                                 
Net Debt (a)*                             $    5,662.7           $   5,335.4
                                                                 
(a) Net debt is the sum of total debt less cash and cash equivalents, as
defined by the credit agreement.
                                                                 
                                                                 
* See Non-GAAP Financial Measures Disclosure
                                                           

                                                               
                                                                        
Biomet, Inc.
Other Financial Information
Reconciliation of Senior Secured Leverage Ratio and Total Leverage Ratio*
(in millions, except ratios, unaudited)

                                                                        
                            August 31, 2012              May 31, 2008
Senior Secured
Debt:
                                                                        
USD Term Loan B             $    2,228.9                 $   2,328.3
EUR Term Loan B                  1,044.4                     1,355.2
Asset Based                      -                           -
Revolver
Cash Flow Revolvers             -                          -
Consolidated Senior              3,273.3      A              3,683.5    E
Secured Debt
                                                                        
Senior Notes                     3,005.5                     2,570.7
European Facilities             3.1                        46.6
Consolidated Total               6,281.9                     6,300.8
Debt
Cash and Cash                   (619.2)      B             (127.6)    F
Equivalents* **
Net Debt*                   $    5,662.7      C          $   6,173.2    G
                                                                        
LTM Adjusted EBITDA
                                                                        
Quarter 2 Fiscal
2012 Adjusted                    266.3
EBITDA
Quarter 3 Fiscal
2012 Adjusted                    260.5
EBITDA
Quarter 4 Fiscal
2012 Adjusted                    277.7
EBITDA
Quarter 1 Fiscal
2013 Adjusted                    237.8
EBITDA
"Run Rate" Cost                 -
Savings**
                                                                        
Quarter 1 2013 LTM          $    1,042.3      D
Adjusted EBITDA*
                                                                        
Fiscal 2008 LTM                                              829.1
Adjusted EBITDA
"Run Rate" Cost                                             57.0
Savings**
                                                                        
Fiscal 2008 LTM                                          $   886.1      H
Adjusted EBITDA*
                                                                        
Senior Secured                   2.55         A+B /          4.01       E+F /
Leverage Ratio*                               D                         H
Total Leverage                   5.43         C / D          6.97       G / H
Ratio*
                                                                        
* See Non-GAAP Financial Measures Disclosure
                                                                        
** As defined by the Credit Agreement dated September 25, 2007


                                                            
                                                                     
Biomet, Inc.
Other Financial Information
Reconciliation of Operating Income (Loss) or Net Loss, as reported to EBITDA,
as adjusted*
(in millions, unaudited)

                                                                     
                                                       Three         Three
                                Three Months Ended     Months        Months
                                                       Ended         Ended
                                May 31, 2012           February      November
                                                       29, 2012      30, 2011
Operating Income                $   (378.0     )       $  108.1      $  103.8
(Loss), as reported
Depreciation                        44.2                  43.9          47.3
Amortization                        77.2                  82.6          84.4
Special items
adjustments
Stock-based                         3.8                   3.5           4.0
compensation expense
Litigation settlements
and reserves and other              (12.7      )          12.8          7.5
legal fees
Trauma acquisition                  4.6                   -             -
costs
Operational
restructuring and
consulting expenses
related to operational
initiatives
(severance, building
impairments, abnormal
manufacturing
variances and other                 6.0                   6.9           16.5
related costs)
Sponsor fee                         2.8                   2.7           2.8
Goodwill and
intangible assets                  529.8               -            -
impairment charge
EBITDA, as adjusted*            $   277.7             $  260.5      $  266.3
                                                                     
                                                                     
                                Year Ended
                                May 31, 2008
Net loss, as reported           $   (1,018.8   )
Depreciation                        140.8
Amortization                        329.8
Interest expense                    516.6
Other (income) expense              9.1
Income tax benefit                  (257.4     )
Additional cost of
sales for inventory                 160.2
write up to fair value
In-process research                 479.0
and development
Financing fees related              171.6
to merger
Share-based payment                 25.8
In-the-money stock                  112.8
option settlement
Distributor agreements              41.7
Department of Justice               26.9
Investment banker fee               29.6
Consulting expenses
related to operational
improvement
initiatives,
severance for former
executives, sponsor
fees and other related
costs                               49.6
Additional
legal/merger related               11.8       
fees
EBITDA, as adjusted*            $   829.1      
                                                                     
                                                                     
* See Non-GAAP Financial Measures Disclosure


                                                       
                                                            
Biomet, Inc.
Consolidated Statement of Cash Flows
(in millions, unaudited)
                                                            
                                                            
                                                            Fiscal 2013
                                                            (Preliminary)
                                                            Three Months Ended
                                                            August 31, 2012
CASH FLOWS PROVIDED BY (USED IN) OPERATING
ACTIVITIES:
Net loss                                                    $     (31.5     )
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization                                     120.6
Amortization and write off of deferred financing                  7.0
costs
Stock-based compensation expense                                  19.1
Loss on extinguishment of debt                                    38.0
Provision for doubtful accounts receivable                        1.3
Deferred income taxes                                             (68.9     )
Other                                                             (1.3      )
Changes in operating assets and liabilities, net of
acquired assets:
Accounts receivable                                               5.8
Inventories                                                       (21.2     )
Prepaid expenses                                                  (4.2      )
Accounts payable                                                  (8.1      )
Income taxes                                                      (4.2      )
Accrued interest                                                  51.9
Accrued expenses and other                                       (18.8     )
Net cash provided by operating activities                         85.5
                                                            
CASH FLOWS PROVIDED BY (USED IN) INVESTING
ACTIVITIES:
Capital expenditures                                              (53.1     )
Acquisitions, net of cash acquired - Trauma                       (280.0    )
Acquisition
Other acquisitions, net of cash acquired                         (5.9      )
Net cash used in investing activities                             (339.0    )
                                                            
CASH FLOWS PROVIDED BY (USED IN) FINANCING
ACTIVITIES:
Debt:
Payments under European facilities                                (0.4      )
Payments under senior secured credit facilities                   (8.5      )
Proceeds from Senior notes                                        1,000.0
Tender of Senior notes                                            (581.7    )
Payment of fees related to refinancing activities                (30.1     )
Net cash provided by financing activities                         379.3
Effect of exchange rate changes on cash                          1.0       
Increase in cash and cash equivalents                             126.8
Cash and cash equivalents, beginning of period                   492.4     
Cash and cash equivalents, end of period                    $     619.2     
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest                                                    $     62.5      
Income taxes                                                $     22.0      
                                                                            

                                                       
                                                            
Biomet, Inc.
Consolidated Statement of Cash Flows
(in millions, unaudited)
                                                            
                                                            
                                                            Fiscal 2012
                                                            Three Months Ended
                                                            8/31/2011^(1)
CASH FLOWS PROVIDED BY (USED IN) OPERATING
ACTIVITIES:
Net loss                                                    $     (39.2    )
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization                                     129.8
Amortization of deferred financing costs                          2.8
Stock-based compensation expense                                  4.7
Recovery of doubtful accounts receivable                          (2.5     )
Loss on impairment of investments                                 9.2
Deferred income taxes                                             (67.0    )
Other                                                             (0.6     )
Changes in operating assets and liabilities:
Accounts receivable                                               21.3
Inventories                                                       (2.7     )
Prepaid expenses                                                  2.7
Accounts payable                                                  (1.5     )
Income taxes                                                      22.4
Accrued interest                                                  67.8
Accrued expenses and other                                       (24.1    )
Net cash provided by operating activities                         123.1
                                                            
CASH FLOWS PROVIDED BY (USED IN) INVESTING
ACTIVITIES:
Proceeds from sales/maturities of investments                     33.7
Purchases of investments                                          (0.2     )
Proceeds from sale of property and equipment                      0.1
Capital expenditures                                              (39.2    )
Acquisitions, net of cash acquired                               (3.9     )
Net cash used in investing activities                             (9.5     )
                                                            
CASH FLOWS PROVIDED BY (USED IN) FINANCING
ACTIVITIES:
Debt:
Payments under European facilities                                (0.5     )
Payments under senior secured credit facilities                   (8.9     )
Equity:
Repurchase of LVB Acquisition, Inc. shares                       (0.3     )
Net cash used in financing activities                             (9.7     )
Effect of exchange rate changes on cash                          (0.5     )
Increase in cash and cash equivalents                             103.4
Cash and cash equivalents, beginning of period                   327.8    
Cash and cash equivalents, end of period                    $     431.2    
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest                                                    $     55.0     
Income taxes                                                $     20.7     
                                                            
(1) Certain amounts have been adjusted to conform to the current presentation.


                                                     
                                                           
Biomet, Inc.
Other Financial Information
GAAP Operating Cash Flow Reconciled to Free Cash Flow* & Unlevered Free Cash
Flow*
(in millions, unaudited)
                                                           
                                                           
                                                           Fiscal 2013
                                                           (Preliminary)
                                                           Three Months Ended
                                                           August 31, 2012
Net loss                                                   $     (31.5     )
Adjustments:
Depreciation and amortization                                    120.6
Amortization and write off of deferred                           7.0
financing costs
Stock-based compensation expense                                 19.1
Loss on extinguishment of debt                                   38.0
Provision for doubtful accounts receivable                       1.3
Deferred income taxes                                            (68.9     )
Other                                                           (1.3      )
TOTAL                                                            84.3
Changes In:
Accounts receivable                                              5.8
Inventories                                                      (21.2     )
Prepaid expenses                                                 (4.2      )
Accounts payable                                                 (8.1      )
Income taxes                                                     (4.2      )
Accrued interest                                                 51.9
Accrued expenses and other                                      (18.8     )
Net cash provided by operating activities                  $     85.5
Capital expenditures                                            (53.1     )
Free Cash Flow*                                            $     32.4
Add back: cash paid for interest                                62.5      
Unlevered Free Cash Flow*^(1)                              $     94.9      
                                                           
(1) Defined as Free Cash Flow plus cash paid for interest. Commonly used by
companies that are
highly leveraged to show how assets perform before interest payments.
                                                           
* See Non-GAAP Financial Measures Disclosure
                                                           

                                              
                                                      
Biomet, Inc.
Other Financial Information
GAAP Operating Cash Flow Reconciled to Free Cash Flow* & Unlevered Free Cash
Flow*
(in millions, unaudited)
                                                      
                                                      
                                                      Fiscal 2012
                                                      Three Months Ended
                                                      8/31/2011^(2)
Net loss                                              $       (39.2      )
Adjustments:
Depreciation and amortization                                 129.8
Amortization of deferred                                      2.8
financing costs
Stock-based compensation expense                              4.7
Recovery of doubtful accounts                                 (2.5       )
receivable
Loss on impairment of                                         9.2
investments
Deferred income taxes                                         (67.0      )
Other                                                        (0.6       )
TOTAL                                                         37.2
Changes In:
Accounts receivable                                           21.3
Inventories                                                   (2.7       )
Prepaid expenses                                              2.7
Accounts payable                                              (1.5       )
Income taxes                                                  22.4
Accrued interest                                              67.8
Accrued expenses and other                                   (24.1      )
Net cash provided by operating                        $       123.1
activities
Capital expenditures                                         (39.2      )
Free Cash Flow*                                       $       83.9
Add back: cash paid for interest                             55.0       
Unlevered Free Cash Flow*^(1)                         $       138.9      
                                                      
(1) Defined as Free Cash Flow plus cash paid for interest. Commonly used by
companies that are
highly leveraged to show how assets perform before interest payments.
                                                      
(2) Certain amounts have been adjusted to conform to the current presentation.
                                                      
* See Non-GAAP Financial Measures Disclosure


Contact:

Biomet, Inc.
Daniel P. Florin, 574-372-1687
Senior Vice President and Chief Financial Officer
or
Barbara Goslee, 574-372-1514
Director, Investor Relations
 
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