Biomet Announces Third Quarter of Fiscal 2014 Financial Results

  Biomet Announces Third Quarter of Fiscal 2014 Financial Results  Business Wire  WARSAW, Ind. -- April 3, 2014  Biomet, Inc. announced today financial results for its third quarter ended February28, 2014.                         Third Quarter Financial Results    *Consolidated net sales increased 6.6% (7.5% constant currency) worldwide     to approximately $823 million   *Knee sales grew 8.4% (9.4% constant currency) worldwide, with U.S. growth     of 7.7%   *S.E.T. sales increased 4.7% (5.8% constant currency) worldwide and grew     10.0% in the U.S.  Consolidated net sales increased 6.6% to $822.5 million worldwide during the third quarter of fiscal year 2014, compared to net sales of $771.5 million during the third quarter of fiscal year 2013. Excluding the effect of foreign currency, consolidated net sales increased 7.5% during the third quarter. U.S. net sales increased 7.6% during the third quarter to $508.9 million, while Europe net sales increased 8.1% (5.7% constant currency) to $199.8 million and International (primarily Canada, Latin America and the Asia Pacific region) net sales decreased 0.1% (increased 9.9% constant currency) to $113.8 million.  Consolidated net sales reflect the combined net benefit of approximately 1.2% from additional revenue related to the acquisition of Lanx, Inc., lower revenue as a result of the bracing divestiture and certain decreased royalties. We had an additional selling day in most of our businesses in the third quarter of fiscal year 2014, compared to the prior year quarter.  Special items, after tax, totaled $173.2 million during the third quarter of fiscal year 2014, compared to $399.4 million during the third quarter of fiscal year 2013.  Reported operating income was $0.2 million during the third quarter of fiscal year 2014, compared to operating loss of $237.4 million during the third quarter of fiscal year 2013. Excluding special items, adjusted operating income totaled $218.3 million during the third quarter of fiscal year 2014, compared to $216.3 million during the prior year period.  Reported net loss in the quarter was $65.9 million, compared to a net loss of $304.5 million during the third quarter of the prior year. Excluding special items, adjusted net income totaled $107.3 million during the third quarter of fiscal year 2014, compared to $94.9 million for the third quarter of fiscal year 2013.  Excluding special items, adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) during the third quarter of fiscal year 2014 totaled $271.5 million compared to $264.2 million for the third quarter of fiscal year 2013.  Reported cash flow from operations totaled $154.7 million during the third quarter of fiscal year 2014, compared to reported cash flow from operations of $145.2 million for the third quarter of fiscal year 2013. Free cash flow (operating cash flow minus capital expenditures) was $94.4 million, which included $100.4 million of cash interest paid in the quarter, compared to a free cash flow of $102.4 million during the third quarter of fiscal year 2013, including $97.5 million of cash interest paid. Unlevered free cash flow (free cash flow plus cash paid for interest) was $194.8 million during the third quarter of fiscal year 2014, compared to $199.9 million for the third quarter of fiscal year 2013.  At February28, 2014, reported gross debt was $5,831.7 million, and cash and cash equivalents, as defined in the Company’s Amended and Restated Credit Agreement dated August2, 2012, totaled $212.4 million, resulting in net debt of $5,619.3 million, compared to $5,610.8 million at May 31, 2013.  Biomet’s President and Chief Executive Officer Jeffrey R. Binder commented, “During our fiscal third quarter, we once again delivered balanced constant currency sales growth across our major geographies and our major product categories.”  About Biomet Biomet, Inc. and its subsidiaries design, manufacture and market surgical and non-surgical products used primarily by orthopedic surgeons and other musculoskeletal medical specialists. Biomet's product portfolio includes hip and knee reconstructive products; sports medicine, extremities and trauma products; spine, bone healing and microfixation products; dental reconstructive products; and cement, biologics and other products. 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 and nine months ended February28, 2014 and 2013 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 acquisitions.  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; 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 acquisitions; 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 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, interest expense as adjusted, provision (benefit) for income taxes as adjusted, cash and cash equivalents (as defined by our credit agreement), net debt, 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, and/or exclude certain expenses, 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, loss on extinguishment of debt, certain non-cash charges, advisory fees paid to the Company’s private equity owners, certain severance charges, acquisition cost, purchase accounting costs, certain litigation costs, including metal-on-metal, loss on swap liability 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. The current presentation aligns with how the Company presently reports sales and markets its products. The Company also reclassified instrument depreciation from cost of sales to selling, general and administrative expense.  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 September 25, 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.  Rounding Amounts may not recalculate due to rounding.    Biomet, Inc.  Product Net Sales  Three Months Ended February 28, 2014 and 2013  (in millions, except percentages, unaudited)                                                                                       Three        Three                              United                        Months       Months      Reported   Constant    States                        Ended        Ended       Growth %   Currency*   Growth                        February     February               Growth %    %                        28, 2014     28, 2013 Knees                  $  254.2     $ 234.7     8.4   %    9.4    %    7.7  % Hips                   162.9        158.5       2.8   %    4.3    %    4.6  % Sports, Extremities,           169.0        161.4       4.7   %    5.8    %    10.0 % Trauma (S.E.T.) Spine, Bone Healing and            115.9        99.6        16.4  %    16.5   %    13.0 % Microfixation Dental                 64.4         64.4        0.1   %    0.3    %    (2.3 )% Cement, Biologics and          56.1        52.9       5.7   %    5.9    %    3.3  % Other Net Sales              $  822.5    $ 771.5    6.6   %    7.5    %    7.6  %                                                                                                              Three Months                  Three Months                                Ended                         Ended                            February 28,      Currency  February 28, 2014                                2014               Impact*    Net Sales Growth                                Net Sales Growth              in                                As Reported                   Local Currencies* Knees                          8.4       %        1.0   %    9.4        % Hips                           2.8       %        1.5   %    4.3        % Sports, Extremities,           4.7       %        1.1   %    5.8        % Trauma (S.E.T.) Spine, Bone Healing            16.4      %        0.1   %    16.5       % and Microfixation Dental                         0.1       %        0.2   %    0.3        % Cement, Biologics and          5.7       %        0.2   %    5.9        % Other Net Sales                      6.6       %        0.9   %    7.5        %                                                                           *  See Non-GAAP Financial Measures Disclosure         Biomet, Inc.  Product Net Sales  Nine Months Ended February 28, 2014 and 2013  (in millions, except percentages, unaudited)                                                                                        Nine Months   Nine Months              Constant    United                       Ended         Ended         Reported   Currency*   States                       February      February      Growth %   Growth %    Growth                       28, 2014      28, 2013                             % Knees                 $ 743.3       $ 699.8       6.2   %    7.4   %     7.0  % Hips                  480.3         469.5         2.3   %    4.0   %     3.6  % Sports, Extremities,          478.8         440.9         8.6   %    9.8   %     11.1 % Trauma (S.E.T.) Spine, Bone Healing and           322.4         311.0         3.7   %    3.6   %     0.3  % Microfixation Dental                188.8         188.5         0.1   %    0.2   %     3.5  % Cement, Biologics and         165.3        159.3        3.7   %    3.5   %     0.1  % Other Net Sales             $ 2,378.9    $ 2,269.0    4.8   %    5.8   %     5.4  %                                                                                                                Nine Months                   Nine Months Ended                                Ended                         February 28, 2014                            February 28,      Currency  Net Sales Growth                                2014               Impact*    in                                Net Sales Growth              Local Currencies*                                As Reported Knees                          6.2       %        1.2   %    7.4       % Hips                           2.3       %        1.7   %    4.0       % Sports, Extremities,           8.6       %        1.2   %    9.8       % Trauma (S.E.T.) Spine, Bone Healing            3.7       %        (0.1  )%   3.6       % and Microfixation Dental                         0.1       %        0.1   %    0.2       % Cement, Biologics and          3.7       %        (0.2  )%   3.5       % Other Net Sales                      4.8       %        1.0   %    5.8       %                                                                          *  See Non-GAAP Financial Measures Disclosure         Biomet, Inc.  Geographic Net Sales  Three Months Ended February 28, 2014 and 2013  (in millions, except percentages, unaudited)                                                                                        Three Months      Three Months              Constant                          Ended             Ended          Reported   Currency*                          February 28,      February 28,   Growth %   Growth %                          2014              2013 Geographic Sales: United States            $   508.9         $  472.9       7.6   %    7.6   % Europe                   199.8             184.7          8.1   %    5.7   % International            113.8            113.9         (0.1  )%   9.9   % Net Sales                $   822.5        $  771.5      6.6   %    7.5   %                                                                                                            Three Months                  Three Months Ended                               Ended                         February 28, 2014                       February 28,      Currency  Net Sales Growth                               2014               Impact*    in                               Net Sales Growth              Local Currencies*                               As Reported United States                 7.6       %        —     %    7.6        % Europe                        8.1       %        (2.4  )%   5.7        % International                 (0.1      )%       10.0  %    9.9        % Total                         6.6       %        0.9   %    7.5        %                                                                          *  See Non-GAAP Financial Measures Disclosure         Biomet, Inc.  Geographic Net Sales  Nine Months Ended February 28, 2014 and 2013  (in millions, except percentages, unaudited)                                                                                       Nine Months      Nine Months                 Constant                         Ended            Ended            Reported   Currency*                         February 28,     February 28,     Growth %   Growth %                         2014             2013 Geographic Sales: United States           $  1,471.9       $  1,395.9       5.4   %    5.4   % Europe                  563.1            521.5            8.0   %    4.7   % International           343.9           351.6           (2.2  )%   8.5   % Net Sales               $  2,378.9      $  2,269.0      4.8   %    5.8   %                                                                                                            Nine Months                   Nine Months Ended                               Ended                         February 28, 2014                       February 28,      Currency  Net Sales Growth                               2014               Impact*    in                               Net Sales Growth              Local Currencies*                               As Reported United States                 5.4       %        —     %    5.4        % Europe                        8.0       %        (3.3  )%   4.7        % International                 (2.2      )%       10.7  %    8.5        % Total                         4.8       %        1.0   %    5.8        %                                                                          *  See Non-GAAP Financial Measures Disclosure         Biomet, Inc.  Consolidated Statements of Operations  Three and Nine Months Ended February 28, 2014 and 2013  (in millions, except percentages, unaudited)                                                                        Three Months Ended           Nine Months Ended                         February 28,                 February 28,                         2014         2013           2014         2013 Net sales               $  822.5      $ 771.5        $ 2,378.9     $ 2,269.0 Cost of sales           326.9        238.5         790.0        646.7      Gross profit            495.6         533.0          1,588.9       1,622.3 Selling, general and             366.4         327.2          1,020.1       976.0 administrative expense Research and development             42.5          35.0           121.4         107.2 expense Amortization            86.5          74.1           237.2         230.2 Goodwill impairment              —             233.0          —             233.0 charge Intangible assets                  —            101.1         —            101.1      impairment charge Operating               0.2           (237.4   )     210.2         (25.2     ) income (loss) Interest                81.1          88.8           274.4         310.8 expense Other (income)          (0.5      )   10.9          5.4          172.4      expense Income (loss) before income           (80.4     )   (337.1   )     (69.6     )   (508.4    ) taxes Benefit for             (14.5     )   (32.6    )     (39.7     )   (106.2    ) income taxes Net income              $  (65.9  )   $ (304.5 )     $ (29.9   )   $ (402.2  ) (loss)                                                                                  Biomet, Inc.  Reconciliation of Reported Consolidated Statements of Operations to Consolidated Statements of Operations, as adjusted*  Three Months Ended February 28, 2014 and 2013  (in millions, except percentages, unaudited)  Three Months Ended February 28, 2014                                   Selling,         Research                                 Provision                       Gross       general          and                          Operating   (benefit)   Net                   profit     and             development  Amortization  income     from       income                                   administrative   expense                      (loss)      income      (loss)                                   expense                                                   taxes As Reported           $ 495.6     $   366.4        $  42.5       $   86.5       $ 0.2       $ (14.5 )   $ (65.9 ) Certain               81.2        (11.8       )    —             —              93.0        —           93.0 litigation Acquisition           0.1         (10.4       )    —             —              10.5        —           10.5 expenses Operational           20.9        (7.7        )    —             —              28.6        —           28.6 restructuring Principal Stockholders          —          (2.8        )    —            —             2.8        —          2.8      fee Special items, before amortization from purchase         102.2       (32.7       )    —             —              134.9       —           134.9 accounting, interest and tax Amortization from purchase         —          —               —            (83.2     )    83.2       —          83.2     accounting Special items,                102.2       (32.7       )    —             (83.2     )    218.1       —           218.1 pre-tax Tax effect            —          —               —            —             —          44.9       (44.9   ) As Adjusted*          $ 597.8     $   333.7        $  42.5       $   3.3        $ 218.3     $ 30.4      $ 107.3                                                                                                                   Three Months Ended February 28, 2013                                    Selling,                                      Goodwill                             Provision                                    general          Research                     and          Operating    Other      (benefit)                    Gross      and             and          Amortization  intangible  income      (income)  from       Net income                        profit      administrative   development                  assets       (loss)       expense    income      (loss)                                    expense          expense                      impairment                           taxes                                                                                  charge As Reported            $ 533.0     $   327.2        $  35.0       $   74.1       $  334.1     $ (237.4 )   $ 10.9     $ (32.6 )   $ (304.5 ) Certain                18.2        (4.8        )    —             —              —            23.0         —          —           23.0 litigation Acquisition            1.9         (0.9        )    —             —              —            2.8          —          —           2.8 expenses Operational            17.3        (3.3        )    —             —              —            20.6         (3.2   )   —           23.8 restructuring Principal Stockholders           —           (2.7        )    —             —              —            2.7          —          —           2.7 fee Asset                  —           —                —             —              (334.1   )   334.1        —          —           334.1 impairment Loss on extinguishment         —          —               —            —             —           —           (3.4   )   —          3.4       of debt Special items, before amortization from purchase          37.4        (11.7       )    —             —              (334.1   )   383.2        (6.6   )   —           389.8 accounting, interest and tax Amortization from purchase          —          —               —            (70.5     )    —           70.5        —         —          70.5      accounting Special items,         37.4        (11.7       )    —             (70.5     )    (334.1   )   453.7        (6.6   )   —           460.3 pre-tax Tax effect             —          —               —            —             —           —           —         60.9       (60.9    ) As Adjusted*           $ 570.4     $   315.5        $  35.0       $   3.6        $  —         $ 216.3      $ 4.3      $ 28.3      $ 94.9                                                                                                                                              *  See Non-GAAP Financial Measures Disclosure         Biomet, Inc.  Reconciliation of Reported Consolidated Statements of Operations to Consolidated Statements of Operations, as adjusted*  Nine Months Ended February 28, 2014 and 2013  (in millions, except percentages, unaudited)  Nine Months Ended February 28, 2014                                      Selling,         Research                                                        Provision                        Gross         general          and                          Operating   Interest    Other      (benefit)   Net                    profit       and             development  Amortization  income     Expense    (income)  from       income                                      administrative   expense                      (loss)                  expense    income      (loss)                                      expense                                                                          taxes As Reported            $ 1,588.9     $  1,020.1       $  121.4      $  237.2       $ 210.2     $ 274.4     $ 5.4      $ (39.7 )   $ (29.9 ) Certain                101.1         (21.4       )    —             —              122.5       —           —          —           122.5 litigation Acquisition            4.7           (15.2       )    —             —              19.9        —           —          —           19.9 expenses Operational            45.3          (5.8        )    (0.1      )   —              51.2        —           0.3        —           50.9 restructuring Principal Stockholders           —             (8.2        )    —             —              8.2         —           —          —           8.2 fee Loss on extinguishment         —            —               —            —             —          —          (6.6   )   —          6.6      of debt Special items, before amortization from purchase          151.1         (50.6       )    (0.1      )   —              201.8       —           (6.3   )   —           208.1 accounting, interest and tax Amortization from purchase          —             —                —             (227.5    )    227.5       —           —          —           227.5 accounting Loss on swap           —            —               —            —             —          (21.8   )   —         —          21.8     liability Special items,         151.1         (50.6       )    (0.1      )   (227.5    )    429.3       (21.8   )   (6.3   )   —           457.4 pre-tax Tax effect             —            —               —            —             —          —          —         125.1      (125.1  ) As Adjusted*           $ 1,740.0     $  969.5         $  121.3      $  9.7         $ 639.5     $ 252.6     $ (0.9 )   $ 85.4      $ 302.4                                                                                                                                             Nine Months Ended February 28, 2013                                      Selling,                                      Goodwill                             Provision                                      general          Research                     and          Operating   Other       (benefit)                    Gross        and             and          Amortization  intangible  income     (income)   from        Net income                        profit        administrative   development                  assets       (loss)      expense     income       (loss)                                      expense          expense                      impairment                           taxes                                                                                    charge As Reported            $ 1,622.3     $   976.0        $  107.2      $  230.2       $  334.1     $ (25.2 )   $ 172.4     $ (106.2 )   $ (402.2 ) Certain                23.1          (9.3        )    —             —              —            32.4        —           —            32.4 litigation Acquisition            3.3           (8.5        )    —             —              —            11.8        —           —            11.8 expenses Operational            35.4          (6.3        )    (0.2      )   —              —            41.9        (3.2    )   —            45.1 restructuring Principal Stockholders           —             (8.2        )    —             —              —            8.2         —           —            8.2 fee Asset                  —             —                —             —              (334.1   )   334.1       —           —            334.1 impairment Loss on extinguishment         —            —               —            —             —           —          (171.1  )   —           171.1     of debt Special items, before amortization from purchase          61.8          (32.3       )    (0.2      )   —              (334.1   )   428.4       (174.3  )   —            602.7 accounting, interest and tax Amortization from purchase          —            —               —            (219.4    )    —           219.4      —          —           219.4     accounting Special items,         61.8          (32.3       )    (0.2      )   (219.4    )    (334.1   )   647.8       (174.3  )   —            822.1 pre-tax Tax effect             —            —               —            —             —           —          —          178.0       (178.0   ) As Adjusted*           $ 1,684.1     $   943.7        $  107.0      $  10.8        $  —         $ 622.6     $ (1.9  )   $ 71.8       $ 241.9                                                                                                                                                 *  See Non-GAAP Financial Measures Disclosure         Biomet, Inc.  Other Financial Information  Reconciliation of Net Income, as reported, to EBITDA, as adjusted*  (in millions, except percentages, unaudited)                                                                                   Three Months   Three Months    Nine Months   Nine Months                       Ended          Ended           Ended         Ended                       February 28,   February 28,    February      February                       2014           2013            28, 2014      28, 2013 Net income (loss), as            $  (65.9  )    $  (304.5  )    $ (29.9   )   $ (402.2  ) reported Interest              81.1           88.8            274.4         310.8 expense Provision (benefit)             (14.5     )    (32.6      )    (39.7     )   (106.2    ) from income taxes Depreciation and                   135.9          122.7           378.4         364.8 amortization Special items, before purchase              134.9         389.8          208.1        602.7      accounting, interest and tax EBITDA, as            $  271.5      $  264.2       $ 791.3      $ 769.9    adjusted*                                                                     Net Sales             $  822.5       $  771.5        $ 2,378.9     $ 2,269.0 EBITDA percentage,           33.0      %    34.2       %    33.3      %   33.9      % as adjusted*                                                                                *  See Non-GAAP Financial Measures Disclosure         Biomet, Inc.  Condensed Consolidated Balance Sheets  (in millions, unaudited)                                                                                                        (Preliminary)        May 31, 2013                                             February 28, 2014 Assets Cash and cash equivalents                   $   212.4            $   355.6 Accounts receivable, net                    582.9                531.8 Inventories                                 684.4                624.0 Current deferred income                     151.6                119.9 taxes Prepaid expenses and other                  135.0                141.3 Property, plant and                         690.9                665.2 equipment, net Intangible assets, net                      3,458.8              3,630.2 Goodwill                                    3,656.8              3,600.9 Other assets                                124.0               125.8 Total Assets                                $   9,696.8         $   9,794.7 Liabilities and Shareholder’s Equity Current liabilities,                        $   611.2            $   523.8 excluding debt Current portion of                          33.2                 40.3 long-term debt Long-term debt, net of                      5,798.5              5,926.1 current portion Deferred income taxes,                      1,058.4              1,129.8 long-term Other long-term liabilities                 194.6                206.1 Shareholder’s equity                        2,000.9             1,968.6 Total Liabilities and                       $   9,696.8         $   9,794.7 Shareholder’s Equity Net Debt (a)*                               $   5,619.3          $   5,610.8                                                                       (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.  Consolidated Statement of Cash Flows and GAAP Operating Cash Flow Reconciled to Free Cash Flow*  & Unlevered Free Cash Flow*  (in millions, unaudited)                                                                                           (Preliminary)   Three        (Preliminary)   Nine                                           Months       Nine Months     Months                           Three Months    Ended        Ended           Ended                           Ended           February     February 28,    February                           February 28,    28, 2013     2014            28, 2013                           2014 CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES: Net income (loss)         $   (65.9  )    $ (304.5 )   $   (29.9  )    $ (402.2 ) Adjustments to reconcile net loss to net cash          — provided by operating activities: Depreciation and          135.9           122.7        378.4           364.8 amortization Amortization and write off of              4.2             7.3          18.6            27.3 deferred financing costs Stock-based compensation              5.0             5.8          13.6            32.3 expense Loss on extinguishment of         —               —            —               155.2 debt Recovery of doubtful accounts         (1.1       )    (1.3     )   —               (0.4     ) receivable Realized gain on          —               (0.2     )   —               (0.2     ) investments Goodwill and intangible assets         —               334.1        —               334.1 impairment charge Deferred income           (23.4      )    (59.9    )   (126.5     )    (165.4   ) taxes Other                     1.1             9.6          (6.2       )    5.9 Changes in operating assets and liabilities,          — net of acquired assets: Accounts                  8.4             3.9          (30.9      )    (53.1    ) receivable Inventories               9.2             1.0          (18.8      )    (33.6    ) Prepaid expenses          (5.6       )    (4.3     )   4.4             (7.9     ) Accounts payable          2.8             (14.2    )   (18.2      )    (28.0    ) Income taxes              8.1             12.6         18.8            5.5 Accrued interest          (22.2      )    (11.3    )   (20.9      )    (12.6    ) Accrued expenses          98.2           43.9        143.2          52.1      and other Net cash provided by operating              154.7           145.2        325.6           273.8 activities CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES: Proceeds from sales/maturities          —               5.5          19.0            5.5 of investments Purchases of              (0.2       )    —            (19.8      )    (6.4     ) investments Proceeds from             0.7             14.0         0.8             14.0 sale of assets Capital                   (60.3      )    (42.8    )   (158.8     )    (149.7   ) expenditures Acquisitions, net of cash acquired          —               —            —               (280.0   ) - 2012 Trauma Acquisition Acquisitions, net of cash acquired          —               —            (148.8     )    — - 2013 Spine Acquisition Other acquisitions, net         (0.5       )    (1.2     )   (1.3       )    (17.2    ) of cash acquired Net cash used in investing                 (60.3      )    (24.5    )   (308.9     )    (433.8   ) activities CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES: Debt: Payments under European                  —               (0.3     )   (2.3       )    (1.0     ) facilities Payments under senior secured            (7.7       )    (8.5     )   (22.6      )    (25.2    ) credit facilities Proceeds under            —               —            159.3           80.0 revolvers Payments under            (56.0      )    (70.0    )   (63.0      )    (80.0    ) revolvers Proceeds from senior notes due          —               730.0        870.5           3,396.2 2020 and term loans Tender/retirement of senior notes           —               (720.8   )   (1,091.6   )    (3,423.0 ) due 2017 and term loans Payment of fees related to                —               (10.0    )   (15.5      )    (77.8    ) refinancing activities Equity:                   — Repurchase of LVB Acquisition, Inc.         —               —            —               (0.1     ) shares Option exercises          0.3            —           0.6            —         Net cash used in financing                 (63.4      )    (79.6    )   (164.6     )    (130.9   ) activities Effect of exchange rate             5.2            8.8         4.7            15.9      changes on cash Increase (decrease) in             36.2            49.9         (143.2     )    (275.0   ) cash and cash equivalents Cash and cash equivalents,              176.2          167.5       355.6          492.4     beginning of period Cash and cash equivalents, end          $   212.4      $ 217.4     $   212.4      $ 217.4   of period                                                                         Free Cash                 $   94.4        $ 102.4      $   166.8       $ 124.1 Flow*(1) Add back: cash            100.4          97.5        287.0          315.5     paid for interest Unlevered Free            $   194.8      $ 199.9     $   453.8      $ 439.6   Cash Flow* (2)                                                                         Supplemental disclosures of cash flow information: Cash paid during the period for: Interest                  $   100.4      $ 97.5      $   287.0      $ 315.5   Income taxes              $   4.5        $ 13.2      $   69.7       $ 49.0                                                                                      (1)  Defined as cash flow from operations less capital expenditures.       Defined as Free Cash Flow plus cash paid for interest. Commonly used by (2)   companies that are highly leveraged to show how assets perform before       interest payments.         *  See Non-GAAP Financial Measures Disclosure       Contact:  Biomet, Inc. Daniel P. Florin, 574-372-1687 Senior Vice President and Chief Financial Officer or J. Pat Richardson, 574-372-3941 Vice President, Investor Relations or Barbara Goslee, 574-372-1514 Director, Investor Relations  
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