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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