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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended May 31, 2002.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________.
Commission file No. 0-12515.
BIOMET INC
(Exact name of registrant as specified in its charter)
INDIANA 35-1418342
(State of incorporation) (IRS Employer Identification No.)
56 EAST BELL DRIVE, WARSAW, INDIANA 46582
(Address of principal executive offices) (Zip Code)
(574) 267-6639
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
COMMON SHARES RIGHTS TO PURCHASE COMMON SHARES
(Title of class) (Title of class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The aggregate market value of the Common Shares held by non-affiliates of the
registrant, based on the closing price of the Common Shares on July 12, 2002, as
reported by the Nasdaq Stock Market, was approximately $5,978,000,000. As of
July 12, 2002, there were 263,286,529 Common Shares outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
PARTS OF FORM 10-K
INTO WHICH DOCUMENT
IDENTITY OF DOCUMENT IS INCORPORATED
Proxy Statement with respect to the 2002
Annual Meeting of Shareholders of the Registrant Part III
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10-K/A
This amendment to the Annual Report of Biomet, Inc. on Form 10-K for the fiscal
year ended May 31, 2002 is being filed to delete the reference to the FDA
website in the Government Regulation section; to delete the Corporate Governance
and Management Objectives section (both in Item #1); and to add Exhibit 10.7
relating to the Joint Venture Agreement between Biomet, Inc. and Merck KGaA in
Item #14.
PART I
ITEM 1. BUSINESS.
GENERAL
Biomet, Inc., an Indiana corporation incorporated in 1977 ("Biomet"), and its
subsidiaries design, manufacture and market products used primarily by
musculoskeletal medical specialists in both surgical and non-surgical therapy,
including reconstructive and fixation devices, electrical bone growth
stimulators, orthopedic support devices, operating room supplies, general
surgical instruments, arthroscopy products, spinal products, bone cements and
accessories, bone substitute materials, craniomaxillofacial implants and
instruments, and dental reconstructive implants and associated instrumentation.
Biomet has corporate headquarters in Warsaw, Indiana, and manufacturing and/or
office facilities in more than 50 locations worldwide.
The Company's principal subsidiaries include Biomet Orthopedics, Inc.; Biomet
Manufacturing Corp.; EBI, L.P.; the Biomet Merck joint venture; Implant
Innovations, Inc.; Walter Lorenz Surgical, Inc. and Arthrotek, Inc. Unless the
context requires otherwise, the term "Company" as used herein refers to Biomet
and all of its subsidiaries.
The Company intends to fully comply with the recent corporate responsibility
legislation enacted by Congress, the Sarbanes-Oxley Act of 2002, in response to
the recent highly publicized corporate accounting scandals. In practice, these
new requirements will not change the way the Company conducts its business or
the method and diligence with which it prepares its financial statements. The
Company has no special purpose entities or off balance sheet transactions, nor
does it make loans to its executive officers. The only partnership in which the
Company is a party is the Biomet Merck joint venture in Europe, which has been
fully disclosed in the Company's financial statements, including the provision
for the minority interest held by Merck KGaA of Darmstadt, Germany.
PRODUCTS
The Company operates in one business segment, musculoskeletal products, which
includes the design, manufacture and marketing of four major product groups:
reconstructive devices, fixation products, spinal products and other products.
The Company has three reportable geographic markets: United States, Europe and
Other. Reconstructive devices include knee, hip and extremity joint replacement
systems, as well as dental reconstructive implants, bone cements and accessories
and the procedure-specific instrumentation required to implant the Company's
reconstructive systems. Fixation products include internal and external fixation
devices, craniomaxillofacial fixation systems and electrical stimulation devices
that do not address the spine. Spinal products include electrical stimulation
devices addressing the spine and spinal fixation systems. The other product
sales category includes softgoods and bracing products, arthroscopy products,
casting materials, general surgical instruments, operating room supplies, wound
care products and other surgical products. Depending on the application, the
Company reports sales of bone substitute materials in the fixation product or
spinal product group.
The following table shows the net sales and percentages of total net sales
contributed by each of the Company's product groups for each of the three most
recent fiscal years ended May 31, 2002.
YEARS ENDED MAY 31,
(DOLLAR AMOUNTS IN THOUSANDS)
-----------------------------
2002 2001 2000
PERCENT PERCENT PERCENT
NET OF TOTAL NET OF TOTAL NET OF TOTAL
SALES NET SALES SALES NET SALES SALES NET SALES
----- --------- ----- --------- ----- ---------
Reconstructive Devices $ 721,004 60% $ 614,308 59% $580,239 63%
Fixation Products 215,544 18% 202,152 20% 180,336 19%
Spinal Products 125,119 11% 91,103 9% 54,119 6%
Other Products 130,235 11% 123,100 12% 108,857 12%
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Total $1,191,902 100% $1,030,663 100% $923,551 100%
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1
RECONSTRUCTIVE DEVICES
Orthopedic reconstructive devices are used to replace joints that have
deteriorated as a result of disease (principally osteoarthritis) or injury.
Reconstructive joint surgery involves the modification of the area surrounding
the affected joint and the implantation of one or more manufactured components,
and may involve the use of bone cement. The Company's primary orthopedic
reconstructive joints are knees, hips and extremities, but it produces other
joints as well. The Company also produces the associated instruments required by
orthopedic surgeons to implant the Company's reconstructive devices, as well as
bone cements and delivery systems. The Company's orthopedic reconstructive
devices are sold through its Biomet Orthopedics, Inc. ("Biomet Orthopedics")
subsidiary. Additionally, dental reconstructive devices and associated
instrumentation are used for oral rehabilitation through the replacement of
teeth and repair of hard and soft tissues.
KNEE SYSTEMS. Total knee replacement procedures normally include a femoral
component, a patellar component, a tibial tray and an articulating surface.
Total knee replacement may occur as an initial joint replacement procedure, or
as a revision procedure due to the need to replace, repair or enhance the
initial implant. Partial, or unicondylar, knee replacement is an option when
only a portion of the knee requires replacement.
The Maxim(R) Complete Knee System incorporates cruciate retaining, posterior
stabilized and constrained components, and competes in the primary and revision
knee market segments. The Maxim(R) System was the Company's largest-selling
knee system during fiscal year 2002 and continues to gain market share in the
United States. The Company is finalizing the development of the Maxim(R)
Accel(TM) Total Knee System, which is designed to be a comprehensive knee
system, addressing primary and revision indications.
The Company continues to be the market leader in addressing the increasing
demand from practitioners and patients for procedures and products accommodating
minimally-invasive knee techniques. The Repicci II(R) Unicondylar Knee System is
specifically designed to accommodate a minimally-invasive knee arthroplasty
procedure. This system incorporates self-aligning metal and polyethylene
components. This innovative procedure can often be performed on an outpatient
basis and requires a smaller incision and less bone removal, which may result in
shorter recovery time and reduced blood loss. The Oxford(TM) Phase 3
Unicompartmental Knee, which is a mobile-bearing unicondylar knee that utilizes
a minimally-invasive technique, continues to experience strong sales outside the
United States. The Company is currently seeking clearance to market the
Oxford(TM) Phase 3 Knee from the U.S. Food and Drug Administration ("FDA").
During the first half of fiscal year 2003, the Company intends to introduce the
Vanguard M(TM) Series Minimally-Invasive Unicompartmental Knee System. The
Vanguard M(TM) System is designed to accommodate surgeons who prefer a
fully-instrumented minimally-invasive unicondylar system, and incorporates a
fixed-bearing tibial component to accompany the femoral component and
instruments of the Oxford(TM) Phase 3 Minimally-Invasive Unicompartmental Knee
System.
The Ascent(TM) Total Knee System incorporates an open box posterior stabilized
femoral component with a swept-back anterior flange that can accept either a
posterior stabilized or constrained tibial bearing. This system is designed with
a deepened patella groove to enhance patellar tracking and contribute to reduced
lateral release rates. The Ascent(TM) System addresses the needs of both the
primary and revision markets.
During fiscal year 2002, Biomet Orthopedics released the Biomet(R) Orthopaedic
Salvage System ("OSS"). This system provides modular flexibility while reducing
overall inventory demands. The OSS System is used mainly in instances of severe
bone loss or significant soft tissue instability as a result of multiple
revision surgeries or oncological bone deficiencies.
The TRAC(R) Mobile Bearing Knee System, which has been positively received in
Europe and is currently involved in clinical studies in the United States, is a
unique knee system utilized primarily in total knee arthroplasty for younger,
more active patients. Its patented rotating platform design allows greater
anatomic flexibility of the knee.
HIP SYSTEMS. Total hip replacement procedures involve the replacement of
the head of the femur and the acetabulum, and may occur as an initial joint
replacement procedure, or as a revision procedure due to the need to replace,
repair or enhance the initial implant. A femoral hip prosthesis consists of a
femoral head and stem, which can be cast, forged or machined depending on the
design and material used. Acetabular components include a prosthetic replacement
of the socket portion, or acetabulum, of the pelvic bone. Because of variations
in human anatomy and differing design preferences among surgeons, femoral and
acetabular prostheses are manufactured by the Company in a variety of sizes and
configurations. The Company currently offers over twenty total hip systems, most
of which utilize titanium or cobalt chromium alloy femoral components and the
Company's patented ArCom(R) polyethylene-lined or metal-on-metal acetabular
components. Many of the femoral prostheses utilize a porous coating, which
enhances the attachment of bone cement to the stem or enables cementless
fixation.
The Alliance(R) family of hip systems is designed to address the demand from
hospitals and surgeon groups toward standardization of total hip systems. The
Alliance(R) hip family provides the largest selection in the marketplace of
primary and revision stems
2
available for implantation with a single set of instrumentation. The Alliance(R)
family of hip systems includes the Answer(R), Bi-Metric(R), Bio-Groove(R), Hip
Fracture(TM), Integral(R), Intrigue(TM), Osteocap RS(R), Progressive(TM),
RX90(TM) and Vision(R) Hip Systems. During fiscal year 2002, Biomet Orthopedics
augmented the Alliance(R) family by introducing Exact((TM)) Instrumentation,
an integrated instrument set developed to promote intraoperative flexibility and
increase the efficiency, simplicity and consolidation of instrument use.
The Mallory-Head(R) Hip System is designed for both primary and revision total
hip arthroplasty procedures. The primary femoral components feature a specific
proximal geometry for cementless indications and a slightly different proximal
ribbed geometry for those patients requiring fixation with bone cement. The
Mallory-Head(R) revision femoral components provide innovative solutions for
difficult revision cases, and have demonstrated excellent clinical results. The
Mallory-Head(R) Calcar Replacement Prosthesis is offered in both a one-piece and
modular geometry, which allows for individual customization at the time of
surgical intervention, even in cases of severe bone deficiency.
Biomet's Metal-on-Metal Hip System combines a cobalt chrome head with a cobalt
chrome liner and has demonstrated a 20- to 100-fold reduction in volumetric wear
in simulator studies compared to traditional metal-polyethylene articulation
systems. The M(2)a-Taper(TM) Metal-on-Metal Articulation System may be utilized
on most of Biomet's femoral components and has continued to evolve with the
introduction of the M(2)a-38(TM)System, which incorporates larger diameter
metal-on-metal components designed to offer increased range of motion and
decrease the likelihood of hip dislocation. The Company is also developing a
ceramic-on-ceramic articulation system, which is currently being marketed
outside the United States and is in the patient-enrollment phase of a clinical
trial in the United States.
During fiscal year 2002, Biomet received clearance from the FDA to market the
Taperloc(R) and Mallory-Head(R) Porous Primary Stems with hydroxyapatite coating
in the United States. The Company already markets several hip components in
Europe with hydroxyapatite coating, which is preferred by some surgeons in
cementless procedures. During fiscal year 2003, the Company plans to introduce
the Max-Ti(TM) Protrusio Cage, the first protrusio cage to offer modular
augments to fit the product to the patient and achieve desired anatomic
positioning. The Company also anticipates clearance from the FDA to market its
constrained hip liners as a result of the FDA's downclassification of
constrained hip liners from Class III to Class II medical devices. This
downclassification was effective May 30, 2002 and could potentially shorten the
FDA review and approval process for constrained hip liners from years to months.
EXTREMITY SYSTEMS. The Company offers a variety of shoulder systems
including the Absolute(R) Bi-Polar, Bi-Angular(R), Bio-Modular(R), Copeland(TM),
Integrated(TM) and Mosaic(TM) Shoulder Systems, as well as uniquely-designed
elbow replacement systems.
The Copeland(TM) Humeral Resurfacing Head was released in the United States
during fiscal year 2002. With 10 years of positive clinical results in the
United Kingdom, the Copeland(TM) Head was developed to minimize bone removal in
shoulder procedures. The Discovery(TM) Elbow is a unique total elbow device that
incorporates an ArCom(R) polyethylene molded bearing and condylar hinge
mechanism designed to produce a more anatomic articulation than observed in
simple-hinged elbow implants. The iBP(TM) (Instrumented Bone Preserving) Elbow
System is marketed in Europe and is designed to closely resemble the natural
anatomy of the elbow to allow for a more complex pattern of movement than
simple-hinged implants.
DENTAL RECONSTRUCTIVE IMPLANTS. Through its subsidiary, Implant
Innovations, Inc. ("3i"), the Company develops, manufactures and markets
products designed to enhance oral rehabilitation through the replacement of
teeth and the repair of hard and soft tissues. These products include dental
reconstructive implants and related instrumentation, bone substitute materials
and regenerative products and materials. A dental implant is a small screw or
cylinder, normally constructed of titanium, that is surgically placed in the
bone of the jaw to replace the root of a missing tooth and provide an anchor for
an artificial tooth. 3i's flagship product, the OSSEOTITE(R) product line,
features a patented micro-porous surface technology, which allows for earlier
loading and improved bone integration to the surface of the implant compared to
competitive dental implants.
3i's offering of restorative treatment options also includes the GingiHue(TM)
Post and the ZiReal(TM) Post. The GingiHue(TM) Post is a gold-colored titanium
nitride coated abutment, which optimizes the projection of natural color to
approximate the appearance of natural teeth. The ZiReal(TM) Post offers a highly
aesthetic restorative option. This zirconia-based implant provides the natural
translucence of ceramic material, but with greater strength, durability and
resistance to cracking than conventional aluminum oxide ceramic abutments. Both
of these products may be used with conventional crown and bridge techniques.
Through its collaboration with Colbar Research & Development Ltd., 3i introduced
OSSIX(TM) Resorbable Collagen Membrane during fiscal year 2002. The OSSIX(TM)
membrane provides a barrier for guided bone regeneration for six months and then
completely resorbs within eight to ten months. The regenerated bone may then be
used as the foundation for a dental implant.
Ossix(TM) is a trademark of Colbar Research & Development Ltd.
3
OTHER RECONSTRUCTIVE DEVICES. Biomet's Patient-Matched Implant ("PMI(R)")
services group expeditiously designs, manufactures and delivers one-of-a-kind
reconstructive devices to orthopedic specialists. The Company believes this
service continues to enhance Biomet's reconstructive sales by strengthening its
relationships with orthopedic surgeons and augmenting its reputation as a
responsive company committed to excellent product design. In order to assist
orthopedic surgeons and their surgical teams in preoperative planning, Biomet's
PMI(R) group utilizes a three-dimensional ("3-D") bone and soft tissue
reconstruction imaging system. The Company uses Computed Tomography ("CT") data
to produce 3-D reconstructions for the design and manufacture of patient-matched
implants. Biomet also provides anatomic physical models based on patient CT
data. With this imaging and model-making technology, Biomet's PMI(R) group is
able to assist the physician prior to surgery by creating 3-D models. Within
strict deadlines, the model is used by engineers to create a PMI(R) design for
the actual manufacturing of the custom implant for the patient.
The Company is involved in the ongoing development of bone cements and delivery
systems. The Company has successfully penetrated the domestic cement market with
Palacos(R) Bone Cement, which is marketed primarily in conjunction with the
Optivac(R) Vacuum Mixing System.
FIXATION PRODUCTS
The Company's fixation products include electrical stimulation devices (that do
not address the spine), external fixation devices, craniomaxillofacial fixation
systems, internal fixation devices and bone substitute materials utilized in
fracture fixation applications.
ELECTRICAL STIMULATION SYSTEMS. The Company's subsidiary, EBI, L.P.
("EBI"), is the market leader in the electrical stimulation segment of the
fixation market. The EBI Bone Healing System(R) unit is a non-invasive option
for the treatment of recalcitrant bone fractures (nonunions) which have not
healed with conventional surgical and/or non-surgical methods. The non-invasive
devices sold by EBI generally provide an alternative to surgical intervention in
the treatment of recalcitrant bone fractures, failed joint fusions and
congenital pseudarthrosis. The EBI Bone Healing System(R) units produce
low-energy pulsed electromagnetic field ("PEMF") signals that induce weak
pulsing currents in living tissues that are exposed to the signals. These
pulses, when suitably configured in amplitude, repetition and duration, affect
bone cells. The EBI Bone Healing System(R) unit may be utilized over a patient's
cast, incorporated into the cast or worn over the skin. In addition, the
OrthoPak(R) Bone Growth Stimulation System offers a small, lightweight
non-invasive bone growth stimulator using capacitive coupling technology. The
OrthoPak(R) System provides greater ease of use and enhances access to fracture
sites. Sales of EBI's non-invasive electrical stimulation products continue to
be positively impacted by the FDA's revision of the definition of "nonunions" to
include fractures with no visibly progressive signs of healing, rather than the
previously required time frame of nine months with no signs of healing, as well
as the revision of the Health Care Financing Administration ("HCFA") policy
covering electrical stimulation therapy for fractures to permit reimbursement
for electrical stimulation therapy three months after a fracture has occurred.
EBI also offers an implantable option when bone growth stimulation is required
subsequent to surgical intervention. EBI's OsteoGen(TM) Totally Implantable Bone
Growth Stimulator is an adjunct treatment when bone grafting and surgical
intervention are required to treat a recalcitrant fracture.
EXTERNAL FIXATION DEVICES. External fixation is generally indicated to
immobilize fractures when traditional casting is not a viable solution. The
DynaFix(R) and Vision(R) Systems are patented devices for use in complicated
trauma situations and in certain limb-lengthening and deformity correction
applications. EBI also offers several other fixation systems addressing distal
radius fractures and elbow fractures, as well as extensions to the DynaFix(R)
and Vision(R) Systems designed to treat the varying and unique needs of
practitioners and patients.
CRANIOMAXILLOFACIAL FIXATION SYSTEMS. The Company manufactures and
distributes craniomaxillofacial and neurosurgical titanium and resorbable
implants, along with associated surgical instrumentation, principally marketed
to craniomaxillofacial, neurosurgical and craniofacial surgeons through its
subsidiary, Walter Lorenz Surgical, Inc. ("Lorenz Surgical"). Lorenz Surgical
also offers specialty craniomaxillofacial surgical instruments, Hard Tissue
Replacement (HTR(R)) custom craniofacial implants and the Mimix(TM) Bone
Substitute Material for use in craniomaxillofacial surgery.
Lorenz Surgical manufactures and markets the LactoSorb(R) Resorbable Fixation
System of resorbable plates and screws comprised of a copolymer of poly-L-lactic
acid and polyglycolic acid. As a result of its innovative design, the
LactoSorb(R) System is comparable in strength to titanium plating systems at its
initial placement and is completely resorbed within 9 to 15 months after
implantation. The LactoSorb(R) System is especially beneficial in pediatric
reconstruction cases by eliminating the need for a second surgery to remove the
plates and screws.
Palacos(R) is a registered trademark of Hereaus Kulzer GmbH.
4
Mimix(TM) Bone Substitute Material is a synthetic tetra-calcium
phosphate/tri-calcium phosphate material. This material is most commonly used
for the repair of cranial defects, and is currently offered in putty form, but
is scheduled to be launched in an injectable form during fiscal year 2003.
INTERNAL FIXATION DEVICES. The Company's internal fixation products include
devices such as nails, plates, screws, pins and wires designed to temporarily
stabilize traumatic bone injuries. These devices are used by orthopedic surgeons
to provide an accurate means of setting and stabilizing fractures. They are
intended as aids to healing and may be removed when healing is complete; they
are not intended to replace normal body structures.
The VHS(R) Vari-Angle Hip Fixation System is a key internal fixation product
line for the Company. Its components can be adjusted intraoperatively, allowing
the hospital to carry less inventory, while providing greater intraoperative
selection of the optimum fixation angle.
During fiscal year 2003, the Company plans to introduce the Quad 4(TM)
Intramedullary Nail System to the domestic market. The Quad 4(TM) System
requires approximately 50% less inventory than competitive systems and is
uniquely designed to address the widest possible variety of femoral fractures.
BONE SUBSTITUTE MATERIALS. When presented with a patient having a bone
defect, such as a fractured bone or bone loss due to removal of a tumor, the
treating surgeon may remove a portion of bone from the patient at a second site
to use as a graft to induce healing at the site of the defect. Bone substitute
materials can eliminate the pain created at the graft site, as well as the costs
associated with this additional surgical procedure. Depending on the specific
use of the bone substitute material, it can have fixation or spinal
applications. During fiscal year 2003, the Company expects to receive clearance
from the FDA to market Calcigen S(TM) (calcium sulfate) bone substitute material
in granular and self-setting forms in the United States for orthopedic
applications.
SPINAL PRODUCTS
The Company's spinal products include electrical stimulation devices for spinal
applications, spinal fixation systems and bone substitute materials and
allograft products for spinal applications.
SPINAL FUSION STIMULATION SYSTEMS. Implantable, direct-current electrical
stimulation units provide an adjunct to surgical intervention in the treatment
of spinal fusion applications. Spinal fusions are surgical procedures undertaken
to establish bony union between adjacent vertebrae. EBI's SpF(R) Implantable
Spinal Fusion Stimulators are used in conjunction with bone grafting to increase
the probability of fusion success. The implantable units each consist of a
generator that provides a constant direct current to a titanium cathode placed
where bone growth is required. The SpinalPak(R) Spine Fusion Stimulation System
offers surgeons a patient-friendly unit for situations in which non-invasive
stimulation is the appropriate option.
SPINAL FIXATION SYSTEMS. The Company manufactures and distributes a
traditional rod and plate system, as well as the SpineLink(TM) Spinal Fixation
System, which addresses many of the inherent drawbacks of traditional rod and
plate systems by addressing each spine segment individually for intrasegmental
control. Through the use of a modular titanium link and polydirectional screw,
this unique system provides an intrasegmental solution to spine fixation,
enabling the surgeon to tailor the segmental construction to the patient's
anatomy. The SpineLink(TM)-II Spinal Fixation System is a second generation
SpineLink(TM) product scheduled to be launched during fiscal year 2003 and
combines the independent, intrasegmental concept of the SpineLink(TM) System
with a low-profile design that simplifies point-to-point fixation for the
surgeon. The EBI VueLock(TM) Anterior Cervical Plate System features
pre-contoured titanium plates with an open design to provide one-step locking
and better visualization of the bone graft site during surgery and on x-ray
films subsequent to the surgical procedure.
BONE SUBSTITUTE MATERIALS. Traditional spinal fixation surgery includes the
use of a spinal fixation device in conjunction with a bone substitute or bone
graft material to increase the likelihood of successful bone fusion. During
fiscal year 2002, the Company launched the OsteoStim(TM) resorbable bone graft
substitute material for spinal applications. The OsteoStim(TM) material is a
granular form of calcium phosphate that is resorbed and replaced with natural
bone during the healing process.
OTHER PRODUCTS
The Company also manufactures and distributes several other products including
orthopedic support products (also referred to as softgoods and bracing
products), arthroscopy products, operating room supplies, casting materials,
general surgical instruments, wound care products and other surgical products.
EBI manufactures and distributes an extensive line of orthopedic support
products under the EBI(R) Sports Medicine trade name. The Company manufactures
and markets a line of arthroscopy products through its Arthrotek, Inc.
("Arthrotek") subsidiary.
VHS(R) is a registered trademark of Implant Distribution Network, Ltd.
5
ORTHOPEDIC SUPPORT PRODUCTS. EBI distributes a line of orthopedic support
products under the EBI(R) Sports Medicine name, including traction framing
equipment, back supports, wrist and forearm splints, cervical collars, shoulder
immobilizers, slings, abdominal binders, knee braces and immobilizers, rib
belts, ankle supports and a variety of other orthopedic splints. Sales of these
softgoods and bracing products are assisted by the Support-on-Site (S.O.S.(TM))
stock and bill program, which efficiently handles the details of product
delivery for the healthcare provider.
ARTHROSCOPY PRODUCTS. Arthroscopy is a minimally-invasive orthopedic
surgical procedure in which an arthroscope is inserted through a small incision
to allow the surgeon direct visualization of the joint. This market is comprised
of five product categories: power instruments, manual instruments, visualization
products, soft tissue anchors, and procedure-specific instruments and implants.
Arthrotek's principal products consist of the Bone Mulch(TM) Screw/WasherLoc(TM)
Device for anterior cruciate ligament repair, the CurvTek(R) Bone Tunneling
System for the reattachment of soft tissue to bone and LactoSorb(R) resorbable
arthroscopic fixation products.
PRODUCT DEVELOPMENT
The Company's research and development efforts are essentially divided into two
categories: innovative new technology and evolutionary developments. Most of the
innovative new technology development efforts are focused on biomaterial
products, and are managed at the corporate level and take place primarily in
Warsaw, Indiana and Darmstadt, Germany. Evolutionary developments are driven
primarily by the individual subsidiaries and include product line extensions and
improvements.
The Company continues to aggressively conduct internal research and development
efforts to generate new marketable products, technologies and materials. In
addition, the Company is well positioned to take advantage of external
acquisition and development opportunities. An important component of the
Company's strategy has been the formation of strategic alliances to enhance the
development of new musculoskeletal products, including the relationships forged
with Organogenesis, Inc. and Z-KAT, Inc. during fiscal year 2002. The Company is
working with Organogenesis to market orthopedic products incorporating the
Organogenesis' FortaFlex(TM) bio-engineered matrix technology, such as the
CuffPatch(TM) rotator cuff repair product, which received clearance from the FDA
in March 2002. The Company is collaborating with Z-KAT to co-develop and
distribute image-guided software and intelligent instrumentation for various
musculoskeletal applications and techniques, including minimally-invasive
procedures.
As previously disclosed, the Company has formed an alliance with Selective
Genetics, Inc. ("Selective Genetics") to develop gene therapy products for
musculoskeletal repair indications. The Company has an exclusive, worldwide
license covering the application of Selective Genetics' Gene Activated Matrix
("GAM(TM)") material for musculoskeletal repair indications and a co-exclusive
license for use of the GAM(TM) material with spine cages. As discussed in Note C
of the Notes to Consolidated Financial Statements, the Company also made a
minority equity investment in Selective Genetics and during the fourth quarter
of fiscal year 2002 incurred a charge of $5.5 million representing impairment of
its equity investment in Selective Genetics based on the equity valuation
utilized by Selective Genetics for its recent round of financing. Despite the
devaluation of the equity investment, the Company continues to be optimistic
about the ultimate marketability of the GAM(TM) material and is continuing the
development of musculoskeletal applications of this technology. In an effort to
ensure the progress of musculoskeletal applications for the GAM(TM) material,
the Company has undertaken greater oversight responsibility for these
development efforts.
For the years ended May 31, 2002, 2001 and 2000, the Company expended
approximately $50,750,000, $43,020,000 and $40,208,000, respectively, on
research and development. It is expected that ongoing research and development
expenses will continue to increase. The Company's principal research and
development efforts relate to its reconstructive devices, electrical stimulation
products, spinal fixation products, revision orthopedic reconstructive devices,
dental reconstructive implants, arthroscopy products, resorbable technology,
biomaterials products, gene therapy technologies and image-guided software in
the musculoskeletal products field.
The Company's research and development efforts have produced approximately 260
new products during the last three fiscal years, including numerous new products
introduced during fiscal year 2002, such as the following products: Exact(TM)
Hip Instrumentation, the M(2)a-38(TM) Acetabular System, Biomet(R) Patella
Reaming System, Maxim(R) PS Pop Top Tibia, Hydroxyapatite coated Taperloc(R)
Porous Components, Hydroxyapatite coated Mallory-Head(R) Porous Primary
Components, Low-Profile Head Small Cannulated Screws, the Copeland(TM) Humeral
Resurfacing Head, Bio-Modular(R) Choice Shoulder System, Absolute(R) Bi-Polar
Shoulder, the Discovery(TM) Elbow System, Avantage(TM) Revision Cup, ECO Hip
System, Helios(R) Porous Hip Stem with Hydroxyapatite Coating, Oxford(R) TMK
Total Meniscal Knee, Performance(TM) Rotating Platform Knee, Nottingham Fracture
Stem, Optimix(TM) Closed Bone Cementing System, LactoSorb(R) Volar Plate, BHS
UltraSoft FLX(R) Flexible Treatment Coils,
GAM(TM) is a trademark of Selective Genetics, Inc.
6
OsteoStim(TM) Resorbable Bone Graft Substitute, OsteoStim(TM) Anterior Cervical
Allograft Spacer, DynaFix(R) Vision(R) Rapid Clamps, DynaFix(R) VS(TM) Osteotomy
System, the SpineLink(TM)-II Spinal Fixation System, A-Force(TM) PF Night
Splint, Alliance(TM) ACL Knee Brace, EBI(R) Sport Back Brace, Mentor(TM) Wrist
Brace, ArthroPasser Suture Passer, Bone Patellar Tendon Bone Instrument Set,
LactoScrew(R) Suture Anchor, LactoSorb(R) Hammertoe Implant, LactoSorb(R)
Resorbable Cross Pin, LactoSorb(R) No Profile Screw & Washer, Ti Screw Titanium
Anchor, Arthrotek(R) Resorbable Orthopedic Fixation System, TruGrip(TM) Screw &
Washer, Alveolar Ridge Distractor, Mimix(TM) Synthetic Bone Substitute Material
in injectable form, LactoSorb(R) Endoscopic Push Screws, Overdenture Abutment,
OSSEOTITE(R) NT Natural-Taper Implant and OSSIX(TM) Resorbable Membrane.
During fiscal year 2003, the Company intends to release many new products
including, but not limited to, the following products: Max-Ti(TM) Protrusio
Cage, Maxim(R) Accel(TM) Total Knee System, Vanguard M(TM) Series
Minimally-Invasive Unicompartmental Knee System, Quad-4(TM) Intramedullary Nail
System with instrumentation, the GPS(TM) Gravitational Platelet Separation
System, Calcigen S(TM) Bone Graft System, Multi-vector Distraction Osteogenesis
Device (the "Blue Device"), 1.5/2.0mm Titanium Osteosynthesis Plating System and
Mimix(TM) Synthetic Bone Substitute Material in injectable form.
GOVERNMENT REGULATION
Most aspects of the Company's business are subject to some degree of government
regulation in the countries in which its operations are conducted. It has always
been the practice of the Company to comply with all regulatory requirements
governing its products and operations and to conduct its affairs in an ethical
manner. This practice is reflected in the Company's code of conduct and the
responsibility of the Audit Committee of the Board of Directors to review the
Company's systems of internal control, its process for monitoring compliance
with laws and regulations and its process for monitoring compliance with its
code of conduct. For some products, and in some areas of the world such as the
United States, Canada, Japan and Europe, government regulation is significant,
and, in general, there appears to be a trend toward more stringent regulation
throughout the world. The Company devotes significant time, effort and expense
addressing the extensive government and regulatory requirements applicable to
its business. Governmental regulatory actions can result in the recall or
seizure of products, suspension or revocation of the authority necessary for the
production or sale of a product, and other civil and criminal sanctions. The
Company believes that it is no more or less adversely affected by existing
government regulations than are its competitors.
In the United States, the development, testing, marketing and manufacturing of
medical devices are regulated under the Medical Device Amendments of 1976 to the
Federal Food, Drug and Cosmetic Act, the Safe Medical Devices Act of 1990, the
FDA Modernization Act of 1997, and additional regulations promulgated by the FDA
and various other federal, state and local agencies. In general, these statutes
and regulations require that manufacturers adhere to certain standards designed
to ensure the safety and efficacy of medical devices.
The Company believes it is well-positioned to face the changing international
regulatory environment. The International Standards Organization ("ISO") has an
internationally recognized set of standards aimed at ensuring the design and
manufacture of quality products. A company that has passed an ISO audit and
obtained ISO registration is internationally recognized as having quality
manufacturing processes. The European Union requires that medical products bear
a CE mark. The CE mark is an international symbol, which indicates that the
product adheres to European Medical Device Directives. Compliance with ISO
quality systems standards is one of the requirements for placing the CE mark on
the Company's products. Each of the Company's manufacturing and/or assembly
facilities are authorized to place the CE mark on their products.
In addition, governmental bodies in the United States and throughout the world
have expressed concern about the costs relating to health care and, in some
cases, have focused attention on the pricing of medical devices. Government
regulation regarding pricing of medical devices already exists in some countries
and may be expanded in the United States and other countries in the future. The
Company is subject to increasing pricing pressures worldwide as a result of
growing regulatory pressures, as well as the expanding predominance of managed
care groups and institutional and governmental purchasers. Under Title VI of the
Social Security Amendments of 1983, hospitals receive a predetermined amount of
Medicare reimbursement for treating a particular patient based upon the
patient's type of illness identified with reference to the patient's diagnosis
under one or more of several hundred diagnosis-related groups ("DRGs"). Other
factors affecting a specific hospital's reimbursement rate include the size of
the hospital, its teaching status and its geographic location. The Company's
orthopedic reconstructive products are primarily covered by DRG 209 (Major Joint
and Limb Reattachment Procedures-Lower Extremities), DRG 471 (Bilateral Major
Procedures of the Lower Extremity) and DRG 491 (Major Joint and Limb
Reattachment Procedures-Upper Extremities), and have also received approval for
pass-through coding under the Hospital Outpatient Prospective Payment System.
Effective October 1, 2002, certain reimbursements for DRG payment will be
adjusted. The payments for DRG 209, 471 and 491 are
7
scheduled to increase 6.9%, 5.8% and 6.7%, respectively. In addition, the
average DRG payments for spinal and trauma procedures are scheduled to increase
5.7% and 5.8%, respectively. In general, the Company considers this to be a
positive event, which may serve to alleviate certain components of pricing
pressure on the Company's products.
While the Company is unable to predict the extent to which its business may be
affected by future regulatory developments, it believes that its substantial
experience in dealing with governmental regulatory requirements and restrictions
throughout the world, its emphasis on efficient means of distribution and its
ongoing development of new and technologically-advanced products should enable
it to continue to compete effectively within this increasingly regulated
environment.
SALES AND MARKETING
The Company believes that sales of its products are currently affected and will
continue to be positively affected by favorable demographic trends and a shift
toward a preference for technologically-advanced products. The demand for
musculoskeletal products continues to grow, in part, as a result of the aging of
the baby boomer population in the United States. The U.S. Census Bureau
projections indicate that the population aged 55 to 75 years is expected to grow
to approximately 74.7 million in 20 years. Moreover, the age range of potential
patients is expanding outside the traditional 55 to 75 year range, as procedures
are now being recommended for younger patients and as elderly patients are
remaining healthier and more active than in past generations. The Company has
also observed a trend toward a demand for technologically-advanced products that
are simple to use and cost effective, while incorporating state-of-the-art
solutions to the demands of the increasingly active patient. The Company has
firmly positioned itself as the advocate of the surgeon and has worked to
promote the right of the surgeon to prescribe the medical treatment best suited
to the needs of the individual patient.
The Company has diligently worked to attract and retain qualified, well-trained
and motivated sales representatives. The breadth of the Company's product
offering and the quality of its salesforces collaborate to create synergies that
uniquely position the Company to continue to efficiently penetrate the
musculoskeletal market. In the United States, the Company's products are
marketed by a combination of independent commissioned sales agents and direct
sales representatives, based on the specific product group being represented. In
Europe, the Company's products are promoted by a mixture of direct sales
representatives, independent commissioned sales agents and independent
third-party distributors, based primarily on the geographic location. In the
rest of the world, the Company maintains direct selling organizations in
approximately ten countries, as well as independent commissioned sales agents
and independent third-party distributors in other key markets. In aggregate, the
Company's products are marketed by more than 1,850 sales representatives
throughout the world.
Elective surgery-related products appear to be influenced to some degree by
seasonal factors, as the number of elective procedures decline during the summer
months and the holiday seasons, with the exception of some elective pediatric
procedures scheduled to coincide with school breaks.
The Company's customers are the hospitals, surgeons, other physicians and
healthcare providers who employ its products in the course of their practices.
The business of the Company is dependent upon the relationships maintained by
its distributors and salespersons with these customers, as well as the Company's
ability to design and manufacture products that meet the physicians' technical
requirements at a competitive price. Major international markets for the
Company's products are Western Europe, Australia, Canada, Asia Pacific and Latin
America. The Company's business in these markets is subject to pricing pressures
and currency fluctuation risks. As the Company continues to expand in key
international markets, it faces obstacles created by competition, governmental
regulations and regulatory requirements.
For the fiscal years ended May 31, 2002, 2001 and 2000, the Company's foreign
sales aggregated $335,527,000, $308,291,000 and $311,289,000, respectively, or
28%, 30% and 34% of net sales, respectively. During fiscal year 2002, foreign
sales were reduced by $7 million due to foreign currency translations.
Additional data concerning net sales to customers, operating income, long-lived
assets, capital expenditures and depreciation and amortization by geographic
areas are set forth in Note K of the Notes to Consolidated Financial Statements
included in Item 8 of this Report and are incorporated herein by reference.
The Company consigns inventory throughout the world to its customers and to its
distributors and direct salespersons for their use in marketing its products and
in filling customer orders. As of May 31, 2002, inventory of approximately
$118,994,000 was consigned to these distributors, salespersons and customers.
8
COMPETITION
The business of the Company is highly competitive. Major competitors in the
orthopedic reconstructive device market include DePuy, Inc., a subsidiary of
Johnson & Johnson; Stryker Howmedica Osteonics, a subsidiary of Stryker Corp.;
Zimmer, Inc., a subsidiary of Zimmer Holdings, Inc.; Smith & Nephew plc and
Sulzer Orthopedics, Inc., a subsidiary of Centerpulse AG (formerly Sulzer Medica
AG). Management believes these five companies, together with Biomet Orthopedics,
have the predominant share of the orthopedic reconstructive device market.
Competition within the industry is primarily based on service and product
design, although price competition is an important factor as providers continue
to be concerned with health care costs. The Company believes that its prices for
orthopedic reconstructive devices are competitive with those in the industry.
The average selling prices in the United States of Biomet Orthopedics' products
have increased 5% during fiscal year 2002 as a result of a shift to higher
priced goods and an increase in the price of its products. The Company believes
its future success will depend upon its service and responsiveness to its
distributors and orthopedic specialists, and upon its ability to design and
market innovative and technologically-advanced products that meet the needs of
the marketplace.
EBI's spinal fixation systems compete with those of Medtronic/Sofamor Danek,
Inc., a subsidiary of Medtronic, Inc.; DePuy AcroMed Corporation, a subsidiary
of Johnson & Johnson; Synthes, Inc.; Centerpulse Spine-Tech, Inc., a division of
Centerpulse AG; Interpore International, Inc.; Stryker Spine, a division of
Stryker Corp.; and others.
EBI's external fixation devices compete with other external fixation devices
primarily on the basis of price, ease of application and clinical results. EBI's
principal competitors in the external fixation market are Smith & Nephew plc;
Stryker Corp.; Synthes, Inc. and Orthofix, Inc., a subsidiary of Orthofix
International N.V. The Company's internal fixation product lines compete with
those of ACE Orthopedics, a division of Johnson & Johnson; Zimmer, Inc., a
subsidiary of Zimmer Holdings, Inc.; Smith & Nephew plc; and Synthes, Inc.
3i products compete in the areas of dental reconstructive implants and related
products. Its primary competitors in the dental implant market include Straumann
AG; Nobel Biocare AB and Centerpulse Dental, Inc., a subsidiary of Centerpulse
AG.
EBI is the market leader in the bone growth stimulation market. EBI's electrical
stimulation products include implantable and non-invasive devices indicated for
spinal fusion applications and bone growth stimulation applications. The
implantable spinal fusion stimulation systems and bone growth stimulation
products are used as an adjunct to conventional surgical procedures to enhance
the success rates of these procedures. EBI's non-invasive bone growth
stimulation products are utilized in long-bone recalcitrant fractures as an
alternative to surgical procedures. Other companies offering products in the
electrical stimulation market include Orthofix, Inc., a subsidiary of Orthofix
International N.V.; OrthoLogic Corp.; and Exogen, Inc., a subsidiary of Smith &
Nephew plc. Competition in the electrical stimulation market is on the basis of
product design, service and success rates of various treatment alternatives.
EBI's non-invasive stimulators offer advantages over conventional surgery or
invasive products in that their use eliminates hospital, surgeon and operating
room costs, and these products can be used in the presence of infection without
creating a risk of additional infection. EBI's implantable stimulators offer the
advantage of conformance to surgical practice and do not require maintenance by
the patient.
Lorenz Surgical primarily competes in the craniomaxillofacial fixation and
specialty surgical instrumentation and neurosurgical cranial flap fixation
markets. Its competitors include Synthes, Inc.; Stryker-Leibinger, a subsidiary
of Stryker Corp.; Bionx Implants, Inc.; Aesculap AG & Co.; ACE Surgical Supply
Company, Inc.; MacroPore, Inc.; KLS-Martin, L.P.; Osteomed Corp.; and Hu-Friedy
Dental.
Arthrotek products compete primarily in the areas of procedure-specific implants
and instruments, manual instruments and power instruments. Competitors include
Smith & Nephew Endoscopy, a division of Smith & Nephew plc; Stryker Corp;
Linvatec Corp., a subsidiary of CONMED Corporation; Mitek, a division of
Ethicon, a Johnson & Johnson Company; Arthrex, Inc.; and Bionx Implants, Inc.
RAW MATERIALS AND SUPPLIES
The raw materials used in the manufacture of the Company's orthopedic
reconstructive devices are principally nonferrous metallic alloys, stainless
steel and polyethylene powder. With the exception of the concerns discussed
below regarding the supply of polyethylene powder, none of the Company's raw
material requirements are limited to any material extent by critical supply or
single origins. The demand for certain raw materials used by the Company, such
as cobalt alloy and titanium, is somewhat cyclical in nature. The primary buyers
of these metallic alloys are in the aerospace industry. If the demands of the
aerospace industry should increase dramatically, the Company could experience
complications in obtaining these raw materials.
9
However, based on its current relationship with its suppliers, the Company does
not anticipate a material shortage in the foreseeable future. Further, the
Company believes that its inventory of raw materials is sufficient to meet any
short-term supply shortages of metallic alloys.
Suppliers of polyethylene powder have expressed an increasing level of concern
due to perceived product liability exposure in the medical device industry. The
Company believes that the concern of the suppliers is related to the litigation
involving the use of silicone in breast implants and attempts by plaintiffs'
class action lawyers to pursue lawsuits against the manufacturers of the raw
material, i.e., silicone. The concern expressed to the Company was two-fold:
first, demand for polyethylene powder from manufacturers of medical devices
represents a nominal portion of the aggregate business of suppliers of
polyethylene powder and, second, the legal risk for manufacturers of raw
material selling to the medical device industry is significant. More recent
product liability class action litigation involving medical devices has most
likely served to increase general concern in the industry. While the Company
continues to have a source from which to purchase polyethylene powder, the
Company is aware of the concerns expressed by suppliers of polyethylene powder,
and recognizes that any heightened concern could potentially result in suppliers
refusing to supply this raw material to the Company.
EBI purchases all components of its electrical stimulators from approximately
250 outside suppliers, approximately 15 of whom are the single source of supply
for the particular product. In most cases, EBI believes that all components are
replaceable with similar components. In the event of a shortage, there are
alternative sources of supply available for all components, but some time would
likely elapse before EBI's orders could be filled.
3i purchases all materials to produce its products from approximately 82
suppliers, approximately 21 of whom are the single source of supply for the
particular product. 3i believes that, in the event of a shortage, there are
alternative sources of supply for all products, and maintains an inventory of
materials sufficient to meet any short-term shortages of supply. The results of
the Company's operations are not materially dependent on raw material costs.
EMPLOYEES
As of May 31, 2002, the Company's domestic operations (including Puerto Rico)
employed approximately 3,240 persons, of whom approximately 1,710 are engaged in
production and approximately 1,530 in research and development, sales,
marketing, administrative and clerical efforts. The Company's international
subsidiaries employ approximately 1,490 persons, of whom approximately 700 are
engaged in production and approximately 790 in research and development, sales,
marketing, administrative and clerical efforts. None of the Company's principal
domestic manufacturing employees are represented by a labor union. The
production employees at its Bridgend, South Wales facility are organized.
Employees working at the facilities in Darmstadt and Berlin, Germany; Valence,
France; and Valencia, Spain are represented by statutory Workers' Councils which
negotiate labor hours and termination rights. The Workers' Councils do not
directly represent such employees with regard to collective bargaining of wages
or benefits. The Company believes that its relationship with all of its
employees is satisfactory.
The establishment of Biomet's domestic operations in north central Indiana, near
other members of the orthopedic industry, provides access to the highly skilled
machine operators required for the manufacture of Biomet products. The Company's
European manufacturing locations in South Wales, England, France, Spain and
Germany also provide good sources for skilled manufacturing labor. EBI's Puerto
Rican operations principally involve the assembly of purchased components into
finished products using a skilled labor force.
PATENTS AND TRADEMARKS
The Company believes that patents and other intellectual property will continue
to be of importance in the musculoskeletal industry. Accordingly, management
continues to protect technology developed internally and to acquire intellectual
property rights associated with technology developed outside the Company.
Management enforces its intellectual property rights consistent with the
Company's strategic objectives. The Company does not believe that it has any
single patent or license (or series of patents or licenses), which is material
to its operations. The Company is not aware of any single patent, the loss or
invalidity of which would be material to its consolidated revenues or earnings.
BIOMET, EBI, W. LORENZ, 3i and ARTHROTEK are the Company's principal registered
trademarks in the United States, and federal registration has been obtained or
is in process with respect to various other trademarks associated with the
Company's products. The Company holds or has applied for registrations of
various trademarks in its principal foreign markets. Unless otherwise noted in
this Report, all trademarks contained herein are owned by Biomet, Inc. or one of
its affiliates.
10
RISK FACTORS
Risk factors facing the Company's business include, but are not limited to the
following: the increasing cost of product development efforts incorporating
technology advances, the litigious nature of the U.S. health care industry, a
potential downward trend of reimbursement prices throughout the world, currency
fluctuations and the financial stability of global markets for the Company's
products.
11
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized on April 4, 2003.
BIOMET, INC.
By: /s/ GREGORY D. HARTMAN
-------------------------------------------------------------
Gregory D. Hartman, Senior Vice President - Finance
(Principal Financial Officer)
12
CERTIFICATIONS OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER
REGARDING FACTS AND CIRCUMSTANCES RELATING TO AMENDED ANNUAL REPORTS
I, Dane A. Miller, certify that:
1. I have reviewed this amended annual report on Form 10-K/A of Biomet,
Inc.;
2. Based on my knowledge, this amended annual report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this amended annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this amended annual report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
amended annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
amended annual report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this amended annual report (the "Evaluation Date");
and
(c) presented in this amended annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
(a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
amended annual report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weakness.
Date: 4/4/2003 /s/ Dane A. Miller
--------- -------------------------------------
Dane A. Miller
President and Chief Executive Officer
14
CERTIFICATIONS OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER
REGARDING FACTS AND CIRCUMSTANCES RELATING TO AMENDED ANNUAL REPORTS
I, Gregory D. Hartman, certify that:
1. I have reviewed this amended annual report on Form 10-K/A of Biomet,
Inc.;
2. Based on my knowledge, this amended annual report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this amended annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this amended annual report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
amended annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
amended annual report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this amended annual report (the "Evaluation Date");
and
(c) presented in this amended annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
(a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
amended annual report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weakness.
Date: 4/4/2003 /s/ Gregory D. Hartman
--------- -------------------------------------
Gregory D. Hartman
Senior Vice President - Finance
and Chief Financial Officer
15
BIOMET, INC.
FORM 10-K
MAY 31, 2002
INDEX TO EXHIBITS
NUMBER ASSIGNED
IN REGULATION S-K, ITEM 601 TITLE OF EXHIBITS
(2) No exhibit
(3) 3.1 Amended Articles of Incorporation filed July 23,1982.
(Incorporated by reference to Exhibit 3(a) to Biomet, Inc. Form
S-18 Registration Statement, File No. 2-78589C).
3.2 Articles of Amendment to Amended Articles of Incorporation filed
July 11, 1983. (Incorporated by reference to Exhibit 3.2 to
Biomet, Inc. Form 10-K Report for year ended May 31, 1983, File
No. 0-12515).
3.3 Articles of Amendment to Amended Articles of Incorporation filed
August 22, 1987. (Incorporated by reference to Exhibit 3.3 to
Biomet, Inc. Form 10-K Report for year ended May 31, 1987, File
No. 0-12515).
3.4 Articles of Amendment to the Amended Articles of Incorporation
filed September 18, 1989. (Incorporated by reference to Exhibit
3.4 to Biomet, Inc. Form 10-K Report for year ended May 31, 1990,
File No. 0-12515).
3.5 Amended and Restated Bylaws as Amended December 13, 1997.
(Incorporated by reference to Exhibit 3.6 to Biomet, Inc. Form
10-K Report for year ended May 31, 1998, File No. 0-12515).
(4) 4.1 Specimen certificate for Common Shares. (Incorporated by
reference to Exhibit 4.1 to Biomet, Inc. Form 10-K Report for
year ended May 31, 1985, File No. 0-12515).
4.2 Rights Agreement between Biomet, Inc. and Lake City Bank as
Rights Agent, dated as of December 16, 1999. (Incorporated by
reference to Exhibit 4 to Biomet, Inc. Form 8-K Report dated
December 16, 1999, File No. 0-12515).
(9) No exhibit.
(10) 10.1 Employee Stock Option Plan, as last amended December 14, 1991.
(Incorporated by reference to Exhibit 10.1 to Biomet, Inc. Form
10-K Report for year ended May 31, 1992, File No. 0-12515).
10.2 Form of Employee Stock Option Agreement. (Incorporated by
reference to Exhibit 10.2 to Biomet, Inc. Form 10-K Report for
year ended May 31, 1991, File No. 0-12515).
10.3 Employee and Non-Employee Director Stock Option Plan, dated
September 18, 1992. (Incorporated by reference to Exhibit 19.1 to
Biomet, Inc. Form 10-K Report for year ended May 31, 1993, File
No. 0-12515).
10.4 Form of Stock Option Agreement under the Employee and
Non-Employee Stock Option Plan dated September 18, 1992.
(Incorporated by reference to Exhibit 4.03 to Biomet, Inc. Form
S-8 Registration Statement, File No. 33-65700).
10.5 401(k) Profit Sharing Plan filed January 19,1996. (Incorporated
by reference to Form S-8 Registration Statement, File No.
333-00331).
10.6 Biomet, Inc. 1998 Qualified and Non-Qualified Stock Option Plan
adopted August 3, 1998. (Incorporated by reference to Exhibit
10.6 to Biomet, Inc. Form 10-K Report for year ended May 31,
1998, File No. 0-12515).
10.7 Joint Venture Agreement between Biomet, Inc. and Merck KGaA dated
as of November 24, 1997 (Incorporated by reference to Exhibit
2.01 to Biomet, Inc. Form 8-K Current Report dated February 17,
1998, Commission File No. 0-12515).
(11) No exhibit.
(12) No exhibit.
16
(13) No exhibit.
(16) No exhibit.
(18) No exhibit.
(21) No exhibit.
(22) No exhibit.
(23) No exhibit.
(24) No exhibit.
(99) 99.1 Written Statement of Chief Executive Officer and Chief Financial
Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
17