Attached files
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| 8-K - FORM 8-K DATED OCTOBER 21, 2009 - ST JUDE MEDICAL, LLC | stjude094756_8k.htm |
Exhibit 99.1
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St. Jude Medical, Inc. |
News Release
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MEDIA AND INVESTOR CONTACT: |
INVESTOR CONTACT: |
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Sara Spafford Freeman |
Angie Craig |
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sfreeman@sjm.com |
acraig@sjm.com |
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651 756 6702 |
651 756 2191 |
St. Jude Medical Reports Third Quarter 2009 Results
ST. PAUL, Minn. – October 21, 2009 – St. Jude Medical, Inc. (NYSE: STJ) today reported sales and net earnings for the third quarter ended October 3, 2009.
Third Quarter Sales
The Company reported net sales of $1.160 billion in the third quarter of 2009, an increase of 7 percent compared with the $1.084 billion in the third quarter of 2008. Foreign currency translation comparisons decreased third quarter sales by approximately $29 million.
Commenting on the Company’s results, St. Jude Medical Chairman, President and Chief Executive Officer Daniel J. Starks said, “Despite some challenging dynamics experienced during the third quarter, St. Jude Medical’s revenue grew approximately 10 percent and we delivered 15 percent growth in adjusted earnings per share on a constant currency basis. International revenue grew 15 percent in the quarter constant currency, but U.S. revenue was lower than expected. Related to our U.S. growth, we have identified approximately 50 U.S. hospitals who did not participate in normal quarter end purchases of cardiac rhythm management devices due to a variety of financial considerations, which we will discuss further on our earnings call this morning. We are lowering our expectations for our fourth quarter results to accommodate the issues we are experiencing from a limited portion of our customer base in the U.S., but we are confident that our long term growth program is on track.”
Cardiac Rhythm Management (CRM)
Total CRM sales, which include implantable cardioverter defibrillator (ICD) and pacemaker products, were $690 million for the third quarter of 2009, a 2 percent increase compared with the third quarter of 2008. On a currency neutral basis, total CRM sales grew 5 percent over the comparable quarter in 2008.
Of that total, ICD product sales were $389 million in the third quarter, a 2 percent increase compared with the third quarter of 2008. ICD revenue grew 5 percent after adjusting for the impact of foreign currency.
Third quarter pacemaker sales were $301 million, an increase of 1 percent from the comparable quarter of 2008. Pacemaker revenue growth was 4 percent after adjusting for the impact of foreign currency.
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St. Jude Medical, Inc. |
Atrial Fibrillation (AF)
AF product sales for the third quarter of 2009 totaled $156 million, a 16 percent increase over the third quarter of 2008. On a currency neutral basis, total AF sales grew 19 percent over the comparable quarter in 2008.
Neuromodulation
Neuromodulation product sales were $84 million in the third quarter of 2009, up 31 percent from the comparable quarter of 2008. Neuromodulation sales were up 34 percent in the quarter after adjusting for the impact of foreign currency.
Cardiovascular
Total cardiovascular sales, which primarily include vascular closure and heart valve products, were $230 million for the third quarter of 2009, an 11 percent increase over the third quarter of 2008. On a currency neutral basis, total cardiovascular sales grew 13 percent over the comparable quarter in 2008. This product category includes sales of products that St. Jude Medical acquired from Radi Medical Systems AB in December 2008.
Sales of vascular closure products in the third quarter of 2009 were $91 million, a 2 percent increase over the third quarter of 2008. Vascular closure product sales grew 6 percent after adjusting for the impact of foreign currency.
Heart valve product sales for the third quarter of 2009 were $80 million, a 3 percent increase compared with the third quarter of 2008. Heart valve product sales grew 6 percent after adjusting for the impact of foreign currency.
Third Quarter Earnings Results
In the third quarter, the Company recorded pre-tax charges of $57 million, or $0.11 per diluted share, comprised primarily of employee termination costs related to continuing efforts to improve sales and sales support productivity as well as to streamline manufacturing operations. Including these charges, reported net earnings for the third quarter of 2009 were $167 million, or $0.48 per diluted share.
Excluding these charges, adjusted net earnings for the third quarter of 2009 were $204 million, or $0.59 per diluted share. A reconciliation of the Company’s non-GAAP adjusted net earnings per share to the Company’s GAAP net earnings per share is provided in the schedule at the end of the press release.
Fourth Quarter and Full-Year 2009 Sales and Earnings Guidance
During a conference call today, St. Jude Medical will provide its range for revenue expectations for the fourth quarter by product category.
The Company expects its consolidated earnings for the fourth quarter of 2009 to be in the range of $0.61 to $0.63 per diluted share and for full-year 2009 to be in the range of $2.41 to $2.43 per diluted share. This full-year guidance does not include the impact on earnings per share of the charges recorded in the third quarter of 2009. A further reconciliation of the Company’s annual guidance is provided in the schedule below.
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St. Jude Medical, Inc. |
Non-GAAP Financial Measures
The Company provides adjusted net earnings and adjusted net earnings per share because St. Jude Medical management believes that in order to properly understand the Company’s short-term and long-term financial trends, investors may wish to consider the impact of certain adjustments (such as in-process research and development charges, impairment charges, restructuring charges, litigation charges or litigation reserve adjustments and income tax adjustments). These adjustments result from facts and circumstances (such as business development activities, restructuring activities, asset impairment events or developments, settlements and other developments relating to litigation and resolution of audits by tax authorities) that vary in frequency and impact on the Company’s results of operations. St. Jude Medical management uses adjusted net earnings and adjusted net earnings per share to forecast and evaluate the operational performance of the Company as well as to compare results of current periods to prior periods on a consolidated basis.
Non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. Investors should consider non-GAAP measures in addition to, and not as a substitute for, or superior to, financial performance measures prepared in accordance with GAAP.
Conference Call/Webcast
St. Jude Medical’s third quarter 2009 earnings call can be heard live today beginning at 7 a.m. CDT (also archived for 90 days) on the following Web site:
http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=73836&eventID=2480079
About St. Jude Medical
St. Jude Medical develops medical technology and services that focus on putting more control into the hands of those who treat cardiac, neurological and chronic pain patients worldwide. The company is dedicated to advancing the practice of medicine by reducing risk wherever possible and contributing to successful outcomes for every patient. Headquartered in St. Paul, Minn., St. Jude Medical employs more than 14,000 people worldwide and has four major focus areas that include: cardiac rhythm management, atrial fibrillation, cardiovascular and neuromodulation. For more information, please visit www.sjm.com.
Forward-Looking Statements
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. Such forward-looking statements include the expectations, plans and prospects for the Company, including potential clinical successes, anticipated regulatory approvals and future product launches, and projected revenues, margins, earnings and market shares. The statements made by the Company are based upon management’s current expectations and are subject to certain risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties include market conditions and other factors beyond the Company’s control and the risk factors and other cautionary statements described in the Company’s filings with the SEC, including those described in the Risk Factors and Cautionary Statements sections of the Company’s Quarterly Reports on Form 10-Q for the fiscal quarters ended April 4, 2009 and July 4, 2009. The Company does not intend to update these statements and undertakes no duty to any person to provide any such update under any circumstance.
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St. Jude Medical, Inc. |
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Geographic Breakdown of Third Quarter 2009 Sales | ||
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Sales |
Reported % Change vs. 3Q08 | |
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Quarter Ended 10/3/09 | ||
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Total Sales |
$1,160 |
7% |
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Total International Sales |
$540 |
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Total US Sales |
$620 |
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Worldwide Cardiac Rhythm Management |
$690 |
2% |
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International Cardiac Rhythm Management |
$306 |
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U.S. Cardiac Rhythm Management |
$384 |
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Worldwide ICD |
$389 |
2% |
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International ICD |
$141 |
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U.S. ICD |
$248 |
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Worldwide Pacemakers |
$301 |
1% |
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International Pacemakers |
$165 |
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U.S. Pacemakers |
$136 |
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Worldwide Atrial Fibrillation |
$156 |
16% |
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International Atrial Fibrillation |
$85 |
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U.S. Atrial Fibrillation |
$71 |
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Worldwide Cardiovascular |
$230 |
11% |
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International Cardiovascular |
$136 |
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U.S. Cardiovascular |
$94 |
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Worldwide Neuromodulation |
$84 |
31% |
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International Neuromodulation |
$13 |
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U.S. Neuromodulation |
$71 |
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Condensed Consolidated Balance Sheets
(in thousands)
(Unaudited)
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October 3, 2009 |
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January 3, 2009 |
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Cash and cash equivalents |
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$ |
798,281 |
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$ |
136,443 |
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Accounts receivable, net |
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1,194,700 |
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1,101,258 |
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Inventories |
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681,732 |
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546,499 |
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Other current assets |
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357,280 |
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295,863 |
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Property, plant & equipment, net |
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1,117,943 |
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980,176 |
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Goodwill |
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2,018,182 |
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1,984,566 |
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Other intangible assets, net |
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472,050 |
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493,535 |
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Other assets |
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229,573 |
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184,164 |
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Total assets |
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$ |
6,869,741 |
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$ |
5,722,504 |
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Current portion of long-term debt |
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$ |
339,595 |
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$ |
75,518 |
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Other current liabilities |
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893,955 |
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953,006 |
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Long-term debt |
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1,632,551 |
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1,126,084 |
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Deferred income taxes, net |
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136,046 |
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112,231 |
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Long-term other liabilities |
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279,586 |
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219,759 |
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Total equity |
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3,588,008 |
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3,235,906 |
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Total liabilities & equity |
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$ |
6,869,741 |
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$ |
5,722,504 |
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St. Jude Medical, Inc. |
St. Jude Medical, Inc.
Condensed Consolidated Statements of Earnings
(in thousands, except per share amounts)
(Unaudited)
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Three Months Ended |
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Nine Months Ended |
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October 3, 2009 |
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September 27, 2008 |
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October 3, 2009 |
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September 27, 2008 |
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Net sales |
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$ |
1,159,606 |
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$ |
1,084,136 |
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$ |
3,477,811 |
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$ |
3,230,634 |
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Cost of sales |
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Cost of sales before special charges |
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299,670 |
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273,926 |
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899,709 |
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822,104 |
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Special charges |
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6,061 |
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0 |
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6,061 |
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0 |
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Total cost of sales |
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305,731 |
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273,926 |
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905,770 |
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822,104 |
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Gross profit |
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853,875 |
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810,210 |
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2,572,041 |
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2,408,530 |
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Selling, general & administrative expense |
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427,227 |
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401,325 |
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1,276,071 |
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1,184,702 |
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Research & development expense |
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142,224 |
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131,054 |
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424,627 |
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393,144 |
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Special charges |
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42,394 |
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0 |
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42,394 |
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0 |
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Operating profit |
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242,030 |
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277,831 |
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828,949 |
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830,684 |
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Other income (expense), net |
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(23,594 |
) |
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(18,105 |
) |
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(35,867 |
) |
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(46,552 |
) |
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Earnings before income taxes |
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218,436 |
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259,726 |
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793,082 |
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784,132 |
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Income tax expense |
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51,501 |
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75,030 |
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205,506 |
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229,955 |
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Net earnings |
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$ |
166,935 |
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$ |
184,696 |
(2) |
$ |
587,576 |
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$ |
554,177 |
(5) |
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Adjusted net earnings (Non-GAAP) |
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$ |
203,989 |
(1) |
$ |
189,598 |
(3) |
$ |
624,630 |
(4) |
$ |
572,289 |
(6) |
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Diluted net earnings per share |
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$ |
0.48 |
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$ |
0.53 |
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$ |
1.69 |
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$ |
1.58 |
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Adjusted diluted net earnings per share (Non-GAAP) |
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$ |
0.59 |
(1) |
$ |
0.54 |
(3) |
$ |
1.79 |
(4) |
$ |
1.64 |
(6) |
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Weighted average shares outstanding- diluted |
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344,298 |
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349,728 |
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348,242 |
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349,984 |
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(1) |
Third quarter 2009 adjusted net earnings and adjusted diluted net earnings per share exclude the following after-tax items totaling $37,054 or $.11 per share: |
-$31,867 charges, or $0.09 per share, primarily related to employee termination costs related to continuing efforts to improve sales and sales support productivity as well as to streamline manufacturing operations.
-$5,187 impairment charges, or $0.02 per share, related to a decline in the fair values of strategic cost investments that are not considered temporary. The associated pre-tax amount of $8,300 was recorded to other income (expense).
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(2) |
Third quarter 2008 net earnings were reduced by $8,247 due to the impact of retroactively adjusting the historical financial statements, as required by GAAP, to reflect the change in accounting related to the convertible debentures. |
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(3) |
Third quarter 2008 adjusted net earnings and adjusted diluted net earnings per share include $4,902 of income tax benefit, or $0.01 per share, related to the benefit from the federal research and development tax credit extended in the fourth quarter of 2008 retroactive to the beginning of the year. |
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(4) |
First nine months 2009 adjusted net earnings and adjusted diluted net earnings per share exclude the following after-tax items totaling $37,054 or $.10 per share: |
-$31,867 charges, or $0.09 per share, primarily related to employee termination costs related to continuing efforts to improve sales and sales support productivity as well as to streamline manufacturing operations.
-$5,187 impairment charges, or $0.01 per share, related to a decline in the fair values of strategic cost investments that are not considered temporary. The associated pre-tax amount of $8,300 was recorded to other income (expense).
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(5) |
First nine months 2008 net earnings were reduced by $24,606 due to the impact of retroactively adjusting the historical financial statements, as required by GAAP, to reflect the change in accounting related to the convertible debentures. |
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(6) |
First nine months 2008 adjusted net earnings and adjusted diluted net earnings per share include $18,112 of income tax benefit, or $0.06 per share, related to the benefit from the federal research and development tax credit extended in the fourth quarter of 2008 retroactive to the beginning of the year. |
Full-Year 2009 Earnings Guidance Reconciliation
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Estimated 2009 diluted net earnings per share |
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$2.30 - $2.32 |
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Estimated 2009 adjusted diluted net earnings per share (Non-GAAP) |
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$2.41 - $2.43 |
(1) |
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(1) |
The Company recorded charges in the third quarter of 2009 that reduced earnings by $0.11 per diluted share. The Company's above estimated 2009 adjusted diluted net earnings per share (Non-GAAP) of $2.41 - $2.43 excludes the impact of this charge |