351346--8/21/2009--BIOMET

related topics

{debt, indebtedness, cash}

{financial, litigation, operation}

{product, liability, claim}

{operation, international, foreign}

{investment, property, distribution}

{capital, credit, financial}

{cost, operation, labor}

{property, intellectual, protect}

{operation, natural, condition}

{customer, product, revenue}

{personnel, key, retain}

{product, market, service}

{acquisition, growth, future}

{condition, economic, financial}

Risks Relating to Our Business Our future profitability depends on the success of our reconstructive products. If we are unable to continue to develop and market new products and technologies in a timely manner or at all, the demand for our products may decrease or our products could become obsolete, and our revenue and profitability may decline. Our business, financial condition, results of operations and cash flows could be significantly and negatively affected by substantial government regulations. We, like other companies in the orthopedic industry, are involved in ongoing governmental investigations, the results of which may adversely impact our business and results of operations. Sales may decline if our customers do not receive adequate levels of reimbursement from third-party payors for our products and if certain types of healthcare reform programs are adopted in our key markets and other administration proposals. Compliance with the terms of the Corporate Integrity Agreement requires cooperation by many employees and others and may divert substantial financial and human resources from our other business activities. The ongoing informal investigation by the United States Securities and Exchange Commission and the United States Department of Justice regarding potential violations of the Foreign Corrupt Practices Act in the sale of medical devices in a number of foreign countries by companies in the medical device industry could have a material adverse effect on our business, financial condition, results of operations and cash flows. We could be subject to further governmental investigations or actions by other third parties as a result of our recent settlement with the Department of Justice and OIG-HHS. The current economic uncertainties may adversely affect our results of operations. We are subject to cost-containment efforts of group purchasing organizations, which may have a material adverse effect on our financial condition, results of operations and cash flows. We conduct a significant amount of our sales activity outside of the United States, which subjects us to additional business risks and may adversely affect our results due to increased costs. We conduct manufacturing operations outside of the United States and are in the process of transitioning certain manufacturing operations to China, which will expose us to additional business risks. Our business and financial performance may be adversely affected by our inability to effectively implement restructuring and cost saving initiatives. Our business may be harmed as a result of product liability litigation. We may be subject to intellectual property litigation and infringement claims, which could cause us to incur significant expenses or prevent us from selling our products. The conditions of the U.S. and international capital markets may adversely affect our ability to draw on our current revolving credit facilities as well as the value of certain of our investments. Loss of our key management and other personnel, or an inability to attract such management and other personnel, could impact our business. If we fail to retain our existing relationships with our independent sales agents and distributors or establish relationships with different agents and distributors, our results of operations may be negatively impacted. A natural or man-made disaster could have a material adverse effect on our business. Any expansion or acquisition may prove risky for us. Risks Related to Our Indebtedness Our substantial level of indebtedness could materially adversely affect our ability to generate sufficient cash to fulfill our obligations under the notes, our ability to react to changes in our business and our ability to incur additional indebtedness to fund future needs. Restrictions imposed by the indentures governing the notes, our senior secured credit facilities and our other outstanding indebtedness may limit our ability to operate our business and to finance our future operations or capital needs or to engage in other business activities. We, including our subsidiaries, have the ability to incur substantially more indebtedness, including senior secured indebtedness, and our noteholders right to receive payments on each series of notes is effectively junior to the right of lenders who have a security interest in our assets to the extent of the value of those assets. We may not be able to generate sufficient cash to service all of our indebtedness, including the notes, and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful. Repayment of our debt, including the notes, is dependent on cash flow generated by our subsidiaries. Claims of noteholders will be structurally subordinated to claims of creditors of all our non-U.S. subsidiaries and some of our U.S. subsidiaries because they will not guarantee the notes. The lenders under our senior secured cash flow facilities will have the discretion to release any guarantors under these facilities in a variety of circumstances, which will cause those guarantors to be released from their guarantees of the notes. Our noteholders right to receive payments on the senior subordinated notes is junior to the rights of the lenders under our senior secured credit facilities and all of our other senior debt (including the senior notes) and any of our future senior indebtedness. If we default on our obligations to pay our other indebtedness, we may not be able to make payments on the notes. We may not be able to repurchase the notes upon a change of control. The trading prices for the notes will be directly affected by many factors, including our credit rating. Federal and state fraudulent transfer laws may permit a court to void the notes and the guarantees, subordinate claims in respect of the notes and the guarantees and require noteholders to return payments received. If this occurs, noteholders may not receive any payments on the notes. We are indirectly owned and controlled by the Sponsors, and the Sponsors interests as equity holders may conflict with the interests of noteholders as creditors. Our noteholders will be required to pay U.S. federal income tax on the senior toggle notes even if we do not pay cash interest.

Full 10-K form ▸

351346--8/21/2009--BIOMET_INC